You could test to see if DNS is passing it the resolution(obviously it is, but this will tell you if your hosts file is correct) by setting no DNS servers. If you are using DHCP, disable it and manually give yourself an IP, subnet and default GW, but no DNS servers. Try pinging the names and see if you get the 127.0.0.1. That will verify your hosts file is working. You sure that your hosts file isn't named wrong (host.) or that you didn't add an extension to it somehow? Just a few things to try.