I was installing the Search Server express today on an existing WSS v3.
The Search Express went well and i got to the path there it wanted to run the Sharepoint Config Wizard and it started it.
And on the 5th step it STOPPED with this error below 
:
08/25/2008 16:54:08 9 ERR The specified file 'C:\WINDOWS\System32\drivers\etc\HOSTS' does not exist
First thing i did was to check if the hosts file did exist and it did but it looked like a backup file "host.bak" 
Well i made it look like a normally host file and i started the wizard again and again it complained that access is denied 
Well the next thing that came tom my mind was giving the sharepoint groups WSS_ADMIN_WPG and WSS_WPG right access to the etc folder or the hosts file it self
After doing that i gave the it a try again and ran the wizard again and BINGO it worked liek a charm 