Well, just to clear something up - you don't necessarily have to add someone's IP address to your lmhost file to 'hack' them.. If a machine is improperly configured, you can connect to them very easily without having to edit the lmhosts file.. But this isn't really 'hacking', but I won't get in to that here...

If you upgraded to Win 2000, you'd be a little more secure, but it all depends on how your machines are configured.