Yes.
I'm not running from cd, but AFAIK you change to a console (Ctrl-Alt-F2) where you're root, and should be able to edit it - or you have to make it writable first.
On my system it is owned by root and rw-r--r--.
The hosts file seems to be part of the read only filesytem. Is there anyway for me to change it so that i can add a host?
(Running version 3.6 off of CD with a USB stick to store config)
Yes.
I'm not running from cd, but AFAIK you change to a console (Ctrl-Alt-F2) where you're root, and should be able to edit it - or you have to make it writable first.
On my system it is owned by root and rw-r--r--.

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