when installing spybot get as far as trying to contact 127.0.0.1 Then it comments that it cant contact it.

Hi dorsett,

Welcome to Experts-Exchange!

Are you still trying to download Spybot?
Or Spybot is already installed and you're trying to check for updates?
it sounds like you're either still trying to download Spybot or trying to check for updates.
127.0.0.1 is the special loopback IP Address of your pc, it means your browser is trying to connect back to your local host(your pc)
Which means your Hosts files is probably blocking Spybot site, check your Hosts file and see if security sites are being blocked, if so, you then delete those lines, malware/viruses are common to block security sites with the Hosts file.

Hosts file is hidden so you need to show hidden files and folders first.

Hosts file is located in these directories depending on your OS:
Windows Vista = C:\WINDOWS\SYSTEM32\DRIVERS\ETC
Windows XP = C:\WINDOWS\SYSTEM32\DRIVERS\ETC
Windows 2K = C:\WINNT\SYSTEM32\DRIVERS\ETC


Can you also download Hijackthis and show us the logfile?
Download Hijackthis:
http://www.trendsecure.com/portal/en-US/tools/security_tools/hijackthis/download

Open Hijackthis, click "Do a system scan and save a logfile" don't fix anything yet.
Please attach the logfile as "Code Snippet".

You can also try this scanner, this is very good.

Please download Malwarebytes' Anti-Malware to your desktop.
http://www.malwarebytes.org/mbam.php

Double-click "mbam-setup.exe" and follow the prompts to install the program.
Make sure to checkmark 'Update Malwarebytes' Anti-Malware and Launch Malwarebytes' Anti-Malware, then click Finish.
If an update is found, it will download and install the latest version.
Once the program has loaded, select "Perform full scan", then click "Scan".
When the scan is complete, click OK, then "Show Results" to view the results.
Be sure that everything is checked, and click "Remove" Selected.

Thanks for response.
Spybot is not installed. The error comes up when doing a fresh install. When i get back to work tomorrow will track down host files and edit. failing that i will post hijack this findings. Thanks for reply.

Spot on the problem. saved me so much time. thanks a lot

I have the same problem on a client's notebook. I have removed the HOSTS file from the C:\WINDOWS\SYSTEM32\DRIVERS\ETC folder and yet it still occurs. The strange thing is that even with the network cable unplugged, I can open a command prompt and ping some known security sites like safer-networking.org it will reply from 127.0.0.1.

What ELSE can cause this as it is not the hosts file or the LMHosts file doing this?