This is my second post in thisthread all I wanted to say is that it's a generic error that happens when client can't connect and/or find host to connect to and that does not prove anything about windows server default settings either way.
Btw my work network is completely physically isolated (government shit) so I'll only be able to try it for real tomorrow.
And we do sometimes use hosts file for systems on the same network but not domain joined. not for any permanent setups but for testing it can be useful.
>thinks that im not going to edit out our server names
That's one very elaborate edit. Really makes it look like you tried to connect to a machine literally named "Server".