Hmm. That is odd indeed. Everything appears to be in the correct order.
How did you create the hosts file? TextEdit? Get info on the file and make sure it isn't retaining the .txt extension.
To modify the file without using root or
the Terminal, simply navigate to /etc in the Finder (Go -> Go to Folder...), drag the file to your desktop (it'll make a copy), edit it and save it, drag it back into /etc while holding the option key. This will copy it back, asking you to authenticate.
a way to get things done without resorting to the root user.
All you have to do is ask.