Local hostname fails to resolve only in browsers

Question

I am having an issue on Windows Server 2008. Basically the problem is that whenever my local hostname is used in a browser it fails to resolve. As far as I can tell the name is correctly set, I can ping it and hostname returns the correct value.

I can access the url if I enter IP manually but it is a "click-once" application that attempts to access online resources and it can not do that. I presume for the same reason that the browser fails to resolve the hostname.

ipconfig /all

C:\Users\Administrator>ipconfig /all
Windows IP Configuration
   Host Name . . . . . . . . . . . . : sips5
   Primary Dns Suffix  . . . . . . . :
   Node Type . . . . . . . . . . . . : Hybrid
   IP Routing Enabled. . . . . . . . : No
   WINS Proxy Enabled. . . . . . . . : No

Ethernet adapter Local Area Connection:

   Connection-specific DNS Suffix  . :
   Description . . . . . . . . . . . : Microsoft Virtual Machine Bus Network Adapter
   Physical Address. . . . . . . . . : 12-34-56-78-99-00 //NOTE - MODIFIED. 
   DHCP Enabled. . . . . . . . . . . : No
   Autoconfiguration Enabled . . . . : Yes
   IPv4 Address. . . . . . . . . . . : xxx.xxx.94.5(Preferred)
   Subnet Mask . . . . . . . . . . . : 255.255.255.128
   Default Gateway . . . . . . . . . : xxx.xxx.94.126
   DNS Servers . . . . . . . . . . . : xxx.xxx.19.82
   NetBIOS over Tcpip. . . . . . . . : Enabled

I have an entry for sips in the hosts file as well.

xxx.xxx.94.5          sips5                          #

As I said I can ping it as well.

Any help would be appreciated.

Edit1 - nslookup for sips5

Server:  de307623-frankf-dns-ns1.xxxx.xxxxx.com
Address:  xxx.xxx.19.82

*** de307623-frankf-dns-ns1.xxxx.xxxxx.com can't find sips5: Non-existent domain