Interesting, using the #pre in my host file does allow me to ping dnnedev.me on 127.0.0.1 successfully.

However IIS still  bounces me back to the default website showing the welcome to windows 7 page ,  the url shown is  ip address of the PC not localhost.

 http://dnndev.me

We have also tried localhost/dnndev.me -  127.0.0.1/dnndev.me etc etc, it always resolves back to default website showing machines ip address

Well that works for me. I clicked your link in the email and it started one of my test sites.

So it has to be bindings in IIS Manager. For me: click the Default Web site in the tree on the left. On the right, in Basic Settings, the physical path should be set to wherever your files are, and in Bindings you should have one for port 80 and the host name dnndev.me.

Then it just works.

The form http://localhost/dnndev.me, and similar, work when the site is a sub-application (named dnndev.me) below the default site. You don't NEED host headers for them although I'm sure it could be made to work.

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Best wishes,
- Richard
Agile Development Consultant, Practitioner, and Trainer
www.dynamisys.co.uk