A: 

I would check the following

1) that your not starting IE against the webserver againt the wrong port, if your using the development IIS then it changes ports at times. That combined with you setting up the browser to launch against a the old port could create this problem.
2) Stop the local IIS and restart it (Again make sure your pointing towards the correct port)
3) Make sure you dont have any hung IE in task manager ( this happens to me sometimes ). Basiclly you have a IE in task manager that uses less then 1mb of ram and does not show on the taskbar, if thats the case kill them.

EKS
1: Browsing to localhost on an unused port will not make the browser hang, just give you a "connection failed" message.2: He is not using the local IIS.
bang
Hi and Thanks, sorry for the delay. Sods law is if you want it to fail to check these out, it starts working. 1) The project has consistently run on 56125 ever since I started it and this remains the case. 2) Have started IIS, though I am using Cassini (which I have also tried restarting)? - no effect. 3) No hung processes of IE.
Program.X
A: 

This doesn't sound, strictly speaking, like a hang. Can that tab/other tabs be navigated to other sites? Is your machine configured to use a proxy?

Is the request actually sent? Using Fiddler2 from www.fiddler2.com with the URL http://ipv4.fiddler:56125/ will show you, and help determine where in IE the problem might be.

EricLaw -MSFT-
Using other tabs, even the URL bar to navigate anywhere (even public web sites) provides no joy. Still same "hang"/"staleness". I've never seen any local requests appear in Fiddler. I didn't know Fiddler respected local->local requests?
Program.X
A: 

So thankfully Microsoft have finally released Security Essentials.

This meant I could de-install AVG (Free and paid-for versions) from my machine.

Hey presto, it works!

Program.X
Was there any conclusive evidence linking this to AVG? I might be seeing a similar problem, but not sure if I have to kill AVG right away or not.
Charles Prakash Dasari
The evidence was I got rid of it and it all worked perfectly. :)
Program.X