When running Pocket IE (PIE) on a PocketPC, in versions PPC 2000 and PPC 2003 to open up http://localhost/ to open a web server running on the device you needed to do some workarounds first. The problem was in PIE itself, and not the Microsoft web server, so it didn't matter what underlying web server you were trying to connect to. Note that this worked fine in PPC 2002.
This has been fixed in PocketPC 2005 with one minor caveat. Opening up http://localhost/ from the browser works just fine. Opening up http://127.0.0.1/ however will not work, again due to a browser problem. We'll hopefully get this fixed in the next major release. For now just use http://localhost/.
As a footnote, in PocketPC 2005 PIE has been rebranded "IE Mobile".
[Author: John Spaith]