Paul,
I just wanted to explain what you where seeing, in case you were curious.
A LabVIEW executable always runs in the Run-time engine. In addition an un-wired terminal returns the local LabVIEW instance, so for an EXE that is the Run-Time engine
By adding the IP address you are now asking it to go check that IP, and no longer are looking at the local instance. It is for this reason that it can actually check if the Development System is running.
Let me know if you have any questions.
Evan
National Instruments