I downloaded a hosts file from here: http://www.bluemicro.net/modules.php?name=hosts-pider and it's causing my startup to be very slow. I read that I should disable the DNS service, but can someone explain exactly what that does? Should I just download a smaller hosts file?

Hello BizzaroSephiroth,

First try to understand what DNS stands for:
http://en.wikipedia.org/wiki/Domain_Name_System

The DNS service caches IP's to make short, the service isn't really needed as it will overal slow down your entire system to be honest. It first looks up the cache and when it does not find the hostname / IP in the cache it finally request it to your ISP. You shouldn't need a smaller host file, just disable the DNS service and you'll be fine.

If the DNS Client is disabled, then what checks to see if a site is in the hosts file?

The DNS Client has nothing to do with the way Windows looks up IP's / hostsnames. The Hosts file contains the mappings of IP addresses to host names. This file is loaded into memory at startup, then Windows checks the Hosts file before it queries any DNS servers, which enables it to override addresses in the DNS. This prevents access to the listed sites by redirecting any connection attempts back to the local machine. The DNS Client is just usefull to create a cache of IP's you already did request and to manage the cache of those already requested IP's.