I had a strange problem with Firefox 3.5.2 and Google Desktop.  Searching GDS via double-control, would send Firefox to an URL resembling:

http://127.0.0.1:4664/search?s=1234567894&q=searchterm&aq=t

which would redirect to my external IP address, and then fail (because I’m not running a web server).

When I switched from Firefox as my default browser to Internet Explorer, double-control search worked.  Furthermore, Firefox would work (i.e. not redirect) if I pasted

http://localhost:4664/search?s=1234567894&q=searchterm&aq=t

into the address bar manually.

I tried disabling add-ons, turning off my proxy.pac file, and starting in safe mode.  No joy.  However, clearing the cache did fix the problem.