"Respond to Ping on Internet WAN Port" must be enabled for the automated PacBell diagnostics to work.
127.0.0.1 localhost in the Hosts file is exactly right
Of course I assume, you have the correct DNS1 and DNS2 entered into your Router as well as the Gateway address.
If you can't get it to work, do get a Repairman out. The installation people are ill-trained, low-paid personnel from a sub-contractor - but the repairmen are well trained Digital Services experts with sophisticated equiptment.