Sorry I haven't gotten to it yet, here is some more information from my
talk on Ad Blocking.

Hosts file:
the location is
%windir%\system32\drivers\etc\hosts on win2k/xp
%windir%\hosts on win9x/me
/etc/hosts on linux/unix

Site with very good, often updated list of ad servers to block, in many
different formats:

http://pgl.yoyo.org/adservers/

DNS:
How to run your own BIND server, here are some code snippets:

In /etc/bind/named.conf, I add the line
include "/etc/bind/zones.adblocking";

Then in /etc/bind/zones.adblocking, I have lines similar to the
following: (The site above will give you the entire list in this format
if you tell it to)

zone "101order.com" { type master; notify no; file
"/etc/bind/db.adblock"; };
zone "123banners.com" { type master; notify no; file
"/etc/bind/db.adblock"; };
zone "123found.com" { type master; notify no; file
"/etc/bind/db.adblock"; };
zone "180solutions.com" { type master; notify no; file
"/etc/bind/db.adblock"; };
zone "247media.com" { type master; notify no; file
"/etc/bind/db.adblock"; };

Finally, you make a /etc/bind/db.adblock which defines where the ad
domain should point to:

$TTL    604800
@       IN      SOA     localhost. root.localhost. (
                             2         ; Serial
                        604800         ; Refresh
                         86400         ; Retry
                       2419200         ; Expire
                        604800 )       ; Negative Cache TTL
;
@       IN      NS      localhost.
@       IN      A       82.165.150.34
*       IN      A       82.165.150.34