It may be because the reverse DNS lookup didn't quite work (e.g. the .local suffix is invalid).
This is how the "detect servers" function works: it sends a UDP broadcast packet on the network, and waits for any responses. Whenever a server responds, the console gets its IP address. It then uses reverse DNS lookup to translate the IP address to a DNS name. This step doesn't always work, though.
Have you tried using the host name without the domain specification? (e.g. "server" instead of "server.local").
Obviously, the solution I proposed in the previous post ("localhost") is not ideal as it only works if you run the console on the server itself (which is not really a normal situation - normally, the console is installed on your workstation).
Thanks
Vlk