Windows Vista and Windows 7
From the Start menu, choose Control Panel.
Select Network and Internet and select Internet Options. Or in Classic View, open the Internet Options control panel.
Click the Connections tab.
Click the LAN Settings button.
Select the "Automatically detect settings" checkbox.

Click OK in both windows.
Reopen iTunes and connect your iPhone, iPad, or iPod.
Update or restore your device.

If that doesn't work then the host file is being blocked. Do you have an Antivirus installed?