I'm building a site on my local box. I edited my hosts file, Windows 2008 R2 64 bit, to resolve 127.0.0.1 to mydev.com. Then, I can surf to http://mydev.com, but I cannot log in. I get the login dialog, but it will not accept my credentials. Do I need to do something so I may log in successfully when I use a name that is mapped to an IP in the hosts file?

I just checked that on a test windows 2008 r2 64 bit box and it worked ok for me. you may try to set the DisableLoopbackCheck registry key as shown here: http://www.information-worker.nl/2009/06/23/disableloopbackcheck-on-windows-server-2008/

That worked!!! I need to know, how in the world did you know about that?

I ran into the same problem some time ago - it was actually related to SP search (the search crawl)