I am running Windows v2.7b18. I have modified c:\windows\system32\drivers\etc\hosts to redirect r2d7c.sheepserver.net to 126.96.36.199. I will still get the "Error connecting to server, using free one" message (don't care).
Anyway, ES seems to be connected to the correct server because it has successfully rendered at least one frame (sheep_244_1023_1139.png) - the request for doing so must have come from the server.
I have no idea whether this frame was uploaded, and I have not received yet a single sheep from the server?!