The http:// address you want to connect to is the ip of the machine on the network. 127.0.0.1 is localhost and not accessible outside that computer.
Yeah. The mining client is running on the same machine. I didn't figure there was a point moving on to external clients if I can't connect to the daemon on the same box.
In any case, that config doesn't let me connect. Not on the lan address of the box or the 127.0.0.1 address.
Hopefully its a windows 7 related problem.
If you are only connecting from the local host you do not need the rpcallowip line at all, you can comment it out.
rpcminer pointed to that address with correct user and password parameters just says it can't retrieve work.
Does it actually say connected then that it's can't get work?
Do you have 8333 port forwarded through your firewall?
At the bottom of the client toward the right in the main window it says Connections, Blocks, and Transactions ... how many connections do you have?