Sharing Localhost on Network in Windows 7

Solution 1:

If I'm understanding you right you want localhost on machines A and B to point to the same place -- This is simultaneously exactly what's happening and completely impossible :-)

localhost by convention always points to 127.0.0.1, the magic loopback IP of the local machine (i.e. 127.0.0.1 on machine A always means machine A; 127.0.0.1 on machine B always means machine B). It's not an address that can be shared between multiple machines (in fact the entire 127.0.0.0/8 network is reserved for loopback use).

To do what you want you need to connect both machines over a network, assign them non-loopback IPs (private addresses out of 10.0.0.0/8, 172.16.0.0/12 or 192.168.0.0/16) & run your service over those addresses.

Consult a good networking book for more details...