As I posted a while ago in the users list, Windows XP SP2 loopback has problems....
Try the below:
<quote>
This update helps resolve an issue on computers running Windows XP Service Pack 2. Programs that connect to IP addresses in the loopback address range may not work as expected....
</quote>
Update for Windows XP Service Pack 2 (KB884020) http://www.microsoft.com/downloads/details.aspx?familyid=17d997d2-5034-4bbb-b74d-ad8430a1f7c8&displaylang=en&Hash=SW3SH7C
Jeff