localhost resolution

I have a Win 98 PC running ICS. This is all working find and my
client PC (running XP) can access the Internet via the shared network
card in my local PC.

If I do IPCONFIG I get this:

Windows 98 IP Configuration

0 Ethernet adapter :

IP Address. . . . . . . . . : 192.168.0.1
Subnet Mask . . . . . . . . : 255.255.255.0
Default Gateway . . . . . . :

1 Ethernet adapter :

IP Address. . . . . . . . . : 82.34.153.26
Subnet Mask . . . . . . . . : 255.255.248.0
Default Gateway . . . . . . : 82.34.152.1

My problem is this. On the Win 98 PC I also want to run Apache for
local development work. Apache runs fine, but I can't actually access
it. If I enter http://localhost/ in the Internet Explorer address bar
then IE attempts to resolve this name using the Internet DNS servers
and sends me to the MSN autoresponse!

If I pull up a command window and ping localhost it resolves the name
to 127.0.0.1 and pings it fine...

Any ideas how I might get localhost to resolve to the localhost in IE?

Cheers,

Alfie