(If you hav4e XP Home you will need to boot to the ADMINISTRATOR account in Safe Mode to see the Security tab)A much "easier way" than your suggesion would be to use EDIT. EXE to alter the HOSTS file or if you are familiar with the CLI as well as syntax of HOSTS you could make do with COPY CONHaving said that, if the HOSTS file is read only the edit will not save unless one also makes use of the ATTRIB command to remove the READ ONLY attribute.
You can check the file properties to see if it is read only and you can check the file and etc folder properties security tab to see what permissions you have.
SCOPE OF THE PROBLEM: This is a problem with Firefox, not the local computer. The operating system, the web server, the entries in the hosts file, and the user's typing skills are not the cause.
This is Firefox's behavior in OS X and in Windows, thus also in IIS and Apache. WHY THIS IS A PROBLEM: Anyone using virtual hosting on their local computer for web development cannot test their sites with Firefox.
Where are you striking trouble you may need to if you are on XP open explorer and go to view folder options and tick/untick the option re showing hidden files/folders.