Actually, according to microsoft, the dns client in XP was *intended* to
check to see if a dns lookup had failed earlier before going to the
hosts file.

We did ping the internal domain controller, added the bogus FQDN, and
tried again. None of that worked, because prior to the VPN working, and
lookup of the domain controller had failed, and been cached. So,
because the failiure was checked before the hosts file, once the VPN was
up, the dns lookups didn't work.

Oh yes, the XP install was factory Dell.

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