127.0.0.1 is a so called loopback IP address. This address is rerouted to local PC and you should be able to ping it even computer is not connected to the internet. This article describes what to do if ping 127.0.0.1 command returns an error.
There could be following reasons why 127.0.0.1 address is not reachable from your computer.
1) Ethernet adapter is malfunctioning
2) TCP/IP network stack installed on your local PC is not working right
Reset TCP/IP stack
Execute following commands from cmd.exe launched under Administrative privileges:
netsh int ip reset c:\log.txt
netsh winsock reset
Commands above do following:
1) flushdns will flush cached DNS records from your computer thus removing all incorrect data that may be stored there
2) netsh in ip reset will uninstall and install TCP/IP protocol. Or more specifically it will rewrite following registry keys:
3) netsch winsock reset command will reset Winsock Layered Service Providers and can potentially fix problems related to modifications to Winsock.
After executing these steps restart your computer and check if problems is fixed.