Thanks for the reply, but it seems that the same driver VirtNet works great on XP. It sends UDP messages out without doubling. I understand this is a loop back driver thus sending to same IP will go all the way down to driver instead of local (127.0.0.1). But when I send from 192.168.1.10 to 192.168.1.5 it should not loopback, just fack an attempt to send it out (this is how it works on XP). But for some reason, only on 2000, it sends this twice. I checked routing tables and they seem fine.
Any protocol component I have to remove from the settings?