IE 8 not recognizing localhost or loopback

[techjan]

When I try to access a local website by using
http://localhost/mywebsite/login.aspx
or
http://127.0.0.1/mywebsite/login.aspx
I get an HTTP 404 - resource cannot be found error

If I use the IPaddress of the server instead of localhost, it works.
This is true for 2 seperate websites on this server

IE appears to be the only place that does not recognize "localhost"

I sure could use some help on this.

Thanks