Resolution:
In SmartSockets 6.5.0, if a client using local protocol trys to connect to an RTserver it will get an authorization denied message and it will display an IP address that does not really exist.  The workaround is to use tcp protocol, even for clients running on the same machine as the RTserver.  Given the performance improvements in current TCP stacks this should not cause any significant loss of performance vs. using the local protocol. (NOTE: WIN/2K does not have a "local" protocol).