Unable to create multi-site sub-directory in drupal
You don't need to alter the hosts file if you don't care about serving on more than one address. If you have an Apache vhost entry for 127.0.0.1/localhost (you will by default, and I think Apache will add a hosts entry for 127.0.0.1) then if you have a public_html dir at mysite you can just dump any number of Drupal installs under that dir.

E.g. 
/home/niklp/public_html/index.html &lt;- get this working, then you can do:
/home/niklp/public_html/drupal1
...
/home/niklp/public_html/drupalx


Sorry if this is a little vague but it's not a Drupal issue, it's an Apache config thing that should be easily resolved.

Edit: you will have a billion less issues if you get off windows and onto linux even for basic setups.