I have had this problem twice (on two different computers), that the localhost entry is missing from the host file. How could this have happened?
The computer was installed with Windows Vista SP1, and I know Visual Studio 2008, SQL Server 2005 Express ed. and VMWare Player were installed on the computer. Never had probs with the first two before. Can it be the VMWare install?
EDIT: On the computers with this problem, there was an IPV6 entry of
EDIT2: I just installed VMWare Player on a clean machine, and it didn't touch the hosts file.