What is hosts file ? where is it residing ?
If you are referring to windows host file then it has nothing to do with TS.
C:\WINDOWS\System32\drivers\etc\
That's not entirely true - the hosts file is used to resolve hostnames into IP addresses before passing such requests onto a DNS (if unresolved by the hosts file) and as such can have an effect on TS and, more likely, OpenDeploy - with regard to the software correctly understanding with which server it is supposed to be communicating.On Windows, it may vary a bit depending on which flavor. On my W2K3 system, it can be found within C:\WINDOWS\System32\drivers\etc\