Thanks I have seen similar things where system-config-smaba was messing up the configuration in FC4 machine. It needed the hand editing of samba configuration.
Again, they don't... The hosts file only has any bearing on the machine it's on. It has nothing to do with other PCs. You can do what you like to the hosts file on a machine, and it has no bearing on anything other PC. Just think of it as having a pocket phone book in your pocket. You've got a list of friend's names and numbers. It's only of any bearing to you as you dial them. If you have the wrong information, you're not going to connect. It's not going to stop any of those friends from calling each other, your notes don't determine their names and numbers, nor would writing your own details down incorrectly stop them from calling you.
Sorry, you are consistently mentioning that /etc/hosts file have nothing to do but I have just tested editing the file and change my host name to "zeenet.local.org". Reactivating the network automatically changed the HOSTNAME= in /etc/sysconfig/network file. So how is that? Next , I am bit confused with TCP/IP network and Samba thing messing up. If I remove my "zeenet" alias, other windows machines in the LAN can't reach my FC4 box. So it seems like alias is very important to Samba (NetBIOS based network).