Hmmm... okay...

Dumb question, you did clear your browser cache...

How about this: take a real address on the internet, put a fake entry to a live machine (your empeg) in your hosts file, see where it resolves. Pick a site you have not visited, so will not be cached anywhere. If you still get out there, your hosts file was not read (DNS query occurred). If you get a the fake entry's site, you know the hosts file was read correctly, and the problem would have to be outside your hosts file.