Windows 7 HOSTS file not working; DNS Client Event ID 1012

Hi there,

For quite some time I've been using the mvps HOSTS file to block advertisements and similar with great success.

However, after recently adding some additional entries to the list, the HOSTS file has completely stopped functioning (I now see advertisements everywhere - quite frustrating considering I am used to living without them entirely), and every time I start my computer I get several DNS Client event 1012 errors:

Log Name: System
Source: Microsoft-Windows-DNS-Client
Date: 08/06/12 6:16:24 PM
Event ID: 1012
Task Category: None
Level: Error
Keywords:
User: NETWORK SERVICE
Computer: qcore7
Description:
There was an error while attempting to read the local hosts file.
Event Xml:
<Event xmlns="http://schemas.microsoft.com/win/2004/08/events/event">
<System>
<Provider Name="Microsoft-Windows-DNS-Client" Guid="{1C95126E-7EEA-49A9-A3FE-A378B03DDB4D}" />
<EventID>1012</EventID>
<Version>0</Version>
<Level>2</Level>
<Task>0</Task>
<Opcode>0</Opcode>
<Keywords>0x4000000000000000</Keywords>
<TimeCreated SystemTime="2012-06-08T08:16:24.424228100Z" />
<EventRecordID>99726</EventRecordID>
<Correlation />
<Execution ProcessID="1552" ThreadID="3300" />
<Channel>System</Channel>
<Computer>qcore7</Computer>
<Security UserID="S-1-5-20" />
</System>
<EventData>
<Data Name="ErrorCode">3221225485</Data>
<Data Name="Location">0</Data>
<Data Name="Context">0</Data>
</EventData>
</Event>

Click to expand...

My first guess was that something was wrong with the formatting of the new entries, so I double checked this and then did an ipconfig /release and renew to check if this had made a difference. Did nothing but generate more event viewer errors.

Next I disabled the DNS Client service. Didn't help.

I have checked the file permissions; SYSTEM, Administrators and my account all have full permissions. The file is, of course, located at "C:\Windows\System32\drivers\etc\HOSTS". I saved it with notepad using ANSI encoding, not Unicode.

I then removed the new entries completely, leaving the file with only the mvps entries (as it was before I updated it). Still no change.

Next I redownloaded the mvps HOSTS file and replaced my current one with that. No change.

Just now I've deleted the entire HOSTS file and made a new one containing only:

127.0.0.1 localhost
::1 localhost

Click to expand...

And yet I am still getting the same errors in event viewer. I've run out of ideas now, I have no clue what the reason for this is any more.

I am running Windows 7 Enterprise, 64 bit.

What else can I try to get my HOSTS file working again? If there's any more information I should provide, please let me know.

Thanks in advance.