The subject behavior will occur if your computer does not have a network adapter (NIC).
To workaround this behavior, install the Microsoft Loopback Adapter:
01. In Control Panel, press Add Hardware.
02. Press Next.
03. Select Yes, I have already connected the hardware.
04. Press Next.
05. Select Add a new hardware device (at the bottom of the list).
06. Press Next.
07. Select Install the hardware that I manually select from a list.
08. Press Next.
09. Select Network adapters.
10. Press Next.
11. Select Microsoft in the Manufacturers box.
12. Select Microsoft Loopback Adapter in the Network Adapter box.
13. Press Next.
14. Press Finish.
NOTE: You could also install the Advanced Networking Pack for Windows XP.
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