Help! firewall detected...

The hosts file is not malware so I'm not sure what the message from Outpost is trying to say. In addition it looks like it is referring to a line with a loopback to local host (the 127.0.0.1 is your PC which is the local host) and that is just typical of a host file line added to keep you from accessing a bad URL. Thousands of lines like this are added to hosts files by many programs. In fact the current Spybot 1.5 will make your host file large than 250 K because it will add that many URL to the host file to protect you.

So in short, that is not spyware. It is a line added to protect you. Perhaps the way you have Outpost setup it is informing you of changes to your host file but it is incorrect and irresponsible to say it is spyware.

 

You're welcome. Surf safely!