i think rank has forgoten that you need a source adress to form a TCP packet else what is an icmp request replying to?

stu, thats because there's a virtual adapter windows created thats actually refered to as loopback (you cant see it, but its there) and windows routes all local adresses via this adapter, even with no physical network card installed in a PC as long as tcp/ip is enabled you will get a 127.0.0.1 created.

loopback isnt a hard coded thing same as 10.x and 192.168.x etc. arent hard coded as private IP adresses, its up to software vendors (ie microsoft) to confrm to the IP standard when writing their software etc.

pinging 127.0.0.1 will never tell you anything usefull