The other day I posted this question http://stackoverflow.com/questions/7519360/urls-are-inconsistently-being-redirected-using-isapi-urlrewrite-3-0
I was doing some local development testing on my laptop and I was getting some general weirdness (As indicated in the hyperlinked question). Now the problem seems bigger. I've gone so far as to turn off IIS locally. Still when I type 'localhost' I get sent to www.sc-pa.com. However, while IIS was still running, if I typed 'localhost/default.asp' that did work. I've tried pinging localhost, which seems fine. I've tried tracert. The only thing I know that I did locally that could be the problem is added dns suffixes to my connection. Other than that I can't understand how this is happening.
The logs for my local IIS don't even get hit when it is running and I type 'localhost'.
my host file C:\Windows\System32\drivers\etc
The mod date of the file is 6/10/2009 and I would never have modified it. It appears normal to me.
# Copyright (c) 1993-2009 Microsoft Corp.
#
# This is a sample HOSTS file used by Microsoft TCP/IP for Windows.
#
# This file contains the mappings of IP addresses to host names. Each
# entry should be kept on an individual line. The IP address should
# be placed in the first column followed by the corresponding host name.
# The IP address and the host name should be separated by at least one
# space.
#
# Additionally, comments (such as these) may be inserted on individual
# lines or following the machine name denoted by a '#' symbol.
#
# For example:
#
# 102.54.94.97 rhino.acme.com # source server
# 38.25.63.10 x.acme.com # x client host
# localhost name resolution is handled within DNS itself.
# 127.0.0.1 localhost
# ::1 localhost
Update View from nslookup localhost

Update #2
I've isolated the issue down to IE8. Chrome and Firefox do resolve localhost to my local machine. I've tried resetting all settings in IE8, that did not help. I even connected to another wireless network and tried.
nslookup localhost? – jscott Sep 27 '11 at 12:46