my knowledge of *nix is limited so this is most likly a dumb question, and i don't mean it to be insulting. but sometimes i overlook the obvious.
are you sure your isp supports pap/chap login, theire are some that don't.
and
what response are you getting when you attemp to connect?
set device /dev/cuaa0
i really havn't used bsd much but isn't the first modem named cua0
as for the hosts file, if you have a name server assigned you don't need to use it. this is true for all systems.
