thanks for all of your help.
I can ftp into the virtualbox image
I would say that your issue is restricted around the http server configurations, may be there is some setting that not allow local access.
So now I am a bit confused as to what and if this nat loopback would do anything.
Never heard about nat-loopback, instead I heard about (and sometimes used) nat-traversal that's required to run client software, i.e. IpSec VPN clients, when the client is behind a nat router/firewall.
Even if you are using NAT for your LAN, your virtual server LAN IP need to be directly mapped to the public IP, implicitly it's not behind the NAT.
Since this was set up by my friend I will have to get back to him when he comes back from holidays.
I was hoping some one might pick up on an error with the /etc/hosts file or may know of something else I could do
Let us know about.