My question is, how is this normally handled? This is not an MMPORPG world server, it is just the host for a p2p session through which all communication with clients is routed. It seems a waste to have the client running on the server''s machine try to send info through the network only to receive it on the same IP address... maybe I missed this topic in the books I''ve been reading. I''m thinking the client/server would be different threads.

Just connect to the local IP which is 127.0.0.1

It''s called the loopback address, you can use the domain name localhost too. It doesn''t send through the network, but it does use the TCP/IP stack.

***
For Java games and Java related resources, go to http://www.javaengines.dk
***

Ok thanks guys. I take it then that 127.0.0.1 is a restricted IP address? used only for reference to the local machine?

Yep. It''s always the local host.