Assuming Setting up the server thru the localhost is what you meant -- Here is what you have to do. I'll try to make this as lucid as possiable without restating the "readme" file.
Sharky's Localhost Setup Information v1.0
Setting up your server via a Localhost. Sharky's Step by Step Guide.
1) Open the eqhost.txt file (which should be located in your Everquest folder)
2) Paste THIS (EXACTLY) into your eqhost.txt file:
[Registration Servers]
{
"localhost:5999"
}
[Login Servers]
{
"localhost:5999"
}
3) SAVE the eqhost.txt file.
4)Open the LoginServer.ini file (also located in your EQ folder)
5) PASTE THIS EXACTLY
[LoginServer]
loginserver=localhost
worldname=Your server name here <-- Put your server name here
locked=false
account=
password=
worldaddress=localhost
loginport=5999
6) Save LoginServer.ini
7) Open your boot5zones.bat file (or boot5zones9x.bat -- If you are using Windows 98, etc.)

Paste this into your boot5zones.bat file:
@echo off
start zoneNT . 127.0.0.1 7995 127.0.0.1
start zoneNT . 127.0.0.1 7996 127.0.0.1
start zoneNT . 127.0.0.1 7997 127.0.0.1
start zoneNT . 127.0.0.1 7998 127.0.0.1
start zoneNT . 127.0.0.1 7999 127.0.0.1
exit
cls
9) Save the file.
10) Open the Minilogin file in your EverQuest Folder.
11) Open the World.exe file in your EverQuest Folder
12) Open Boot5zones (or Boot5zones.win9x file if you are using win98, etc.)
13) As soon as Boot5zones is loaded, open the eqw.exe file.
14) Eqw.exe will Load up.
15) Get to the login menu.
16) Enter the Username: eqemu and Password: eqemu (or customized password that you have set up; try the eqemu way FIRST)
17) You should be able to login.
1

Login to your server.
19) Presto. It *SHOULD* work. Let me know if it does not.
===============
Note that: This guide assumes that you have already followed the "README" file included with the EQEMU download. This guide also assumes that you have the MySQL installed and working to the specifications made in the readme.
If you have any questions, Contact me.
-Sharky