> A bit more info:
> If I sit on PC1 and ping PC1 I get the response
> 'pinging PC1 (169,254,0,3)' followed by a series of reponses to pings.
> So all fine but no network involved.
>
> If I sit on PC1 and ping PC2 I get the response
> 'pinging PC2 (0,0,0,0)' followed by a response of zeros.
> So it looks as though the 'hosts' file is not being interpreted.
>
> But if I sit on PC1 and ping 'Fred' I get the reply
> 'unknown host Fred'
>
> So pc1 clearly knows about pc2 but can't resolve the host IP address
> properly. ???
> Perhaps I shall have to re-install win98...Heaven forbid!
> Regards Dave.

I would check these 3 things carefully:

1. the Hosts file has no extension on it
2. it resides in the Windows directory
3. there is an ending carriage return in the Hosts file

Windows acts flaky sometimes when the Hosts and Services files
don't have a blank line at the end of them.

HTH
Woody