What is a Loopback Adapter?
The Microsoft Loopback adapter is a testing tool for a virtual network environment where network access is not available. Also, you must use the Loopback adapter if there are conflicts with a network adapter or with a network adapter driver. You can bind network clients, protocols, and other network configuration items to the Loopback adapter, and you can install the network adapter driver or network adapter later while retaining the network configuration information.
Manual installation
To manually install the Microsoft Loopback adapter in Windows XP, follow these steps:
1. Click Start, and then click Control Panel. Because this is XP, you may have it set up this way, or you may have your interface set up in Classic view. Either way, navigate your way to ‘Add Hardware’, or ‘Printers and Other Hardware’

2. Launch the Wizard to Add Hardware to your system. Do not be confused because you are not actually installing any new hardware, just simply adding a ‘network adapter’ which is acting as a virtual adapter.
3. Click next, once you have launched the Wizard. You will see a series of dialog boxes open to ask you about scanning for hardware changes, etc – you will want to do everything manually in this exercise. There will be no automatic scanning for any reason because you have not installed anything, the installation will immediately fail.

4. You will next be asked if the hardware is connected. You can select Yes from the options and click Next.

5. Now, select *from the bottom of the list* the ‘Add a new hardware device’ option, and then click Next.

6. Click Install the hardware that I manually select from a list, and then click Next.

7. Select ‘Network adapters’ from the Common hardware types section within the dialog box. Click Next.

8. Select Microsoft and then the Microsoft Loopback Adapater, and then click Next.



Lastly, you will be prompted to Finish up the installation.
Viewing and Configuring the Loopback Adapter
Once you have finished the installation, you will have a brand new loopback interface configured on your PC. There are a few things that you should know about the use of the loopback adapter.
• First, it will appear as a new interface connection in the properties of My Network Places. It will also show up with you view IPCONFIG from the command line.
• Second, you will be confused about it when you see it because if you have multiple adapters set up as most do, you will see Local Area Connection, Local Area Connection 2, Local Area Connection 3 and so on. A trick to seeing what is what is to hover your mouse over the connections until you find the right one as seen in the illustration here:

• It is recommended that you rename the connection to something like ‘LOOPBACK’ so you can differentiate what it is quicker, and if you use IPCONFIG, check out the output below, you will know it’s the LOOPBACK.
C:\>ipconfig
<

>
Ethernet adapter LOOPBACK:
Connection-specific DNS Suffix . :
Autoconfiguration IP Address. . . : 169.254.25.129
Subnet Mask . . . . . . . . . . . : 255.255.0.0
Default Gateway . . . . . . . . . :
C:\>
• Lastly, notice that the address given to the adapter is on the APIPA subnet. APIPA, which is Automatic Private IP Addressing, is a way for the PC to put itself on the network if DHCP is configured but not available. You can keep this on the APIPA range or hard code a static IP address in to use and test with.
• Unless you disable the interface, it will always appear as up because it cannot go down from a hardware failure as there is no hardware to fail.
Now you can test with this IP address, it will always remain stable and so on.