Thanks Bron for your help and it is working correctly as you said.
Does this mean that I will not get any more spyware?
Sadly no. You need to keep proactive software such as Spybot and Ad-Aware live on your system to combat newly developed threats. That host file will not stop you downloading KNOWN programs with spyware/malware in them -- but it WILL stop them contacting home with your information. That host file was last updated about 2 weeks ago, so it's pretty safe to say most common threats will be covered in that hosts file. But it's not clever and it's not a way to detect threats. It's just nice to have if your system is crawling with spyware. The absolute best way to deal with it is to run software to eredicate the problem, which the host file does not.
Here is a list of (mostly free) Anti-Virus/Anti-Malware/Anti-Spyware recommended software :
Ad-Aware - Free, Depending on version - The other of the best malware detectors and cleaners out there.
Avast AntiVirus - One of the only virus scanners proven to detect all known viruses and trojans. Avast! Antivirus 4 Home Edition is free for personal use.
AVG Anti-Virus - Free - It's antivirus! It's free! The Pro-version ($30 for 2 years) is absolutely worth the money, but is not necessary for most users.
Bazooka Scanner - Adware Spyware tool. Dosnet remove them, but gives you a link with tutorials on how to remove each one it finds (I use this as a redundant check after runing Avast, or Spyware Doctor)
ClamWin - a Free Anti-virus software for Microsoft Windows 98/Me/2000/XP and 2003.
Spybot Search & Destroy - Free - One of the best malware detectors and cleaners out there.
Spyware Doctor - Shareware ($30), Freeware Version can only *scan* - Yet Another Spyware Utility.