When I go into explorer and manually change the attributes of the HOSTS file, it has no effect on the setting of Spybots IE tweak. If I have checked the lock the hosts file box or if I have left it unchecked, it remains the same no matter what I manually do to the HOSTS file properties.
It does not work like that for me. I think that you were not giving spybot the chance to refresh the IE tweak window, to let it update its setting. To do that you must move out of the IE tweak window (e.g. by opening some other window in Spybot, or closing/reopening Spybot) and then going back to the IE Tweak window.
I also use the mvphosts file, though I update manually.
I tested the following, with Windows Explorer and Spybot both open.
Starting of with the HOSTS file in Windows Explorer showing as read only and the lock hosts file box in Spybot IE Tweaks window checked:
1. Uncheck the lock hosts in IE Tweaks window.
2. Look in Windows Explorer, Hosts/properties shows read only unchecked.
3. Set HOSTS to read only in Windows Explorer.
4. Move out of the IE tweaks window in Spybot then back in, the lock HOSTS file box is checked.
5. In Windows Explorer uncheck read only on HOSTS properties.
6. Allow Spybot to refresh its IE Tweaks settings by moving out of the IE Tweaks window and back in: lock hosts is unchecked.
Conclusion: the lock HOSTS file setting (checked or unchecked) in IE Tweaks in Spybot
does reflect the setting of the read only property of HOSTS file and vice versa. Changing the read only property of the HOSTS file in Windows Explorer or in Spybot are completely equivalent. They are just two places to achieve the same ends.
Since setting it to locked in Spybot does not prevent a user (at least one with admin rights) from changing it manually in Windows Explorer, I can't see how the setting in Spybot could affect an app's ability to change the read only property, unless somehow Spybot can sense the difference between an app doing it and a user doing it manually in Windows Explorer. For that it would need to be actively monitoring who or what is trying to change the read only property of the HOSTS file. As far as I know, teatimer is the active monitoring part of Spybot, the rest is passive. I don't use teatimer, so don't know if that is the cause of your updating problems. Or it could be some other active monitoring software, if you have any (windows defender or some security suite).
Sorry Bitman to repeat some of what you said: I must have been typing while you posted.