In 3.0.2 this was changed to fail the connection if the host couldn't be resolved by FlashFXP, After releasing 3.0.2 a couple users came to us and explained their situation. We have decided that this was probably a bad decision and we'll be changing it in the next release.
In the mean-time you could revert back to v3.0.
http://www.flashfxp.com/zip/FlashFXP_30_Setup.exe