The ServerName directive, as described from the Apache documentation: "The ServerName directive sets the hostname of the server; this is used when creating redirection URLs. If it is not specified, then the server attempts to deduce it from its own IP address; however this may not work reliably, or may not return the preferred hostname."
Basically, since Apache isn't getting a name, it's guessing at one, and choosing the 127.0.0.1 address, as you see in the message you copied for me. If your OS X machine has an IP address on your network, then you should use THAT as the URL to try and get to from your OS 8 machine.
When you try to get to 127 on your OS 8 machine, you're, in essence, saying "hey! I have a server on this OS 8 machine! use it!". Since that's not the case, you've got to say "hey! I have a server on my OS X machine, which is called 192.168.176.22 (example)! use it!".