I give specific instructions on how to change the DirectoryIndex in the fourth article, available here:
You should see absolutely no difference between 127.0.0.1 and localhost - if you do, that's insanely supremely weird.
As for your Flash file, how are your links defined within your HTML file? If they're absolute URLs (like http://www.server.com/flash.swf) as opposed to relative URLs (like /flash.swf), then yes, it would request the file from the remote server. Generally, if you want your website to be as portable as possible, you should use relative URLs as much as possible.