Connecting to 127.0.0.1 slow, but only on Windows Domain Network.

Here is an interesting one. 

Configuration Details: 

We have local web servers on our laptops for development. 

Hosts file entry is 127.0.0.1 server1.domain.net 

Windows DNS entry is 192.168.0.2 server1.domain.net

If we add the host file entry, flush DNS, and connect to server1.domain.net the browser connects to server1.domain.net via 127.0.0.1, but it takes forever to load. 

If with the same configuration we connect to wireless in a different IP scope it loads instantly. 

We have for, the sake of testing, removed the DNS entry from the DC. But this appears to have had no effect. 

Any thoughts?