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Have you read through the section of the manual on setting up an IOS?
From your description it kind of sounds like you put both IPs in the same X-Plane. If you are using two computers, one should have the IP for the instructor (making it the student) and the other needs the IP for the student so that it is the instructor.
You can use the IOS on one computer with two monitors, but that is set up in the rendering options screen, not net connections.
I know you don't systemically support it, and this question I don't think seeks that.
To lose the teach/focus dilution of time that showing proper respect for send/receive engaging the ATC training environment of VATSIM represents,do you think the Squawkbox client would also work on a "nobody on it but us" dedicated server that I would just elsewhere rent?
It was originally designed by Ben Supnik I believe, and he is head developer on X-Plane so he is no longer working on the plugin. It looks like a man by the name of Chris Collins has taken over updating it. Otherwise, if you're looking for help or recommendations you might check the forums at X-Plane.org as they have a large user base.
This site is no longer being actively maintained.