Got it to work

Its actually quite simple once i realized my mistakes.
Install and config the loopback adapter with the IP 192.168.1.12. Don't edit this IP, if your wondering what it's for, it is an IP to go back and create the, "loop."
Now edit your host with what he put in his host file.
Edit L2.ini, change the ServerAddr to 127.0.0.1
Edit tcptunnel's IP to your servers original IP
launch the tcptunnel, launch walker, run l2.