Hosts file problem

I have a problem with my hosts file on my computer (xp). When having added list of the sites, IE still has access to the site. I also tried the same procedure on my own computer (win 7) and nothing happened.

Please read the following before replying:

- I have added addresses of the sites with 127.0.0.1 (and also 0.0.0.0) - none of them worked
- I have included spaces, did not use #, http:// and tabs
- The file is not in .txt format, it's without format
- I have administrative privileges
- I have flushed dns
- I have disabled LAN and re-enabled it
- I have changed the order of priority in the registry (hosts before dns)
- I have tried everything website.com, .website.com and www.website.com
- I do not have proxy enabled in my IE
- I have deleted the old hosts file, copied the content and put the new hosts file in there.
- I have rebooted.

However, IE still has access to the site. What's the problem, then? I am using router, home workgroup - is that the cause it doesn't work? I have no idea.

Please help me with that.

Thanks.