Reading a Microsoft blog post recently, I was reminded of a customer request from late 2002.  The emailed request was something like this:

Had to use the generic Win NT4 install on a Toshiba laptop yesterday.  There were some issues.

No network adapter is installed at the time of the Win NT4 installation.* This causes an error with the installation of eTrust and the CA UniCenter software.  It also means that networking component needs to be manually installed AND Error 7001 is also written to the system log.
To fix the Error 7001, we need to reinstall Service Pack 6a.

My suggestion is that you install the Microsoft Loopback Adapter during the installation, as it will solve the build issues we’re finding.

This was a brilliant suggestion as it turns out.  We would occasionally see build failures due to our NT4 build not having the network card drivers for the newer network cards.  Older versions of SQL (SQL 2000?) also needed a network card to be installed, so SQL would install properly.
The loopback adapter was a suitable work around for those issues.

These days, I would only use a loopback adapter with virtual machines (think VMware/VPC) IF the host machine didn’t have a physical network connection.
NT4 MS Loopback Adapter A loopback adapter will give you a working TCP/IP stack.

On Windows 7, it’s not obvious or easy to add a loopback adapter.  But Cesar de la Torre tells you how, on his MSDN Blog.

“ In any case, if you want to run the Wizard where you can manually add hardware, you need to start it from the COMMAND PROMPT:

  1. Run cmd, but do it like: “Run as Administrator”
  2. From the command prompt, write down “hdwwiz.exe” and execute it. Then, the “Add Hardware Wizard” will be launched.
  3. Select: Install hardware manually –> Network Adapters –> Microsoft –> Microsoft Loopback Adapter.

* – Network adapters WERE installed for supported desktops & laptops.  The customer had an unsupported laptop.