ad_channel.inc uses its own path matching which does not work on localhost sites. Drupal core provides drupal_match_path() which should be used instead.

The current check in ad_channel_cache_filter() can be simplified to

      foreach ($channels['ads'][$aid] as $chid) {
        $channel = $channels['channels'][$chid];
        $display_by_url = $channel->display;
        $urls = unserialize($channel->urls);
       	$path = drupal_get_path_alias($_GET['q']);
        // Compare with the internal and path alias (if any).
        $page_match = drupal_match_path($path, $urls);

          _debug_echo("ad_channel_cache: checking aid($aid) against channel($chid) path(". adserve_variable($search) .") regexp($regexp) match($match) display[$display_by_url]");
        // display ad on all except matching urls
        if ($display_by_url == 0) {
          if (empty($urls) || !$page_match) {
            _debug_echo("ad_channel_cache: aid($aid) is valid");
            $valid_ads[$chid][] = $aid;
            if ($nochannel_display == 1) {
              $nochannel_percent[$chid] = $channel->no_channel_percent;
              _debug_echo("ad_channel_cache: channel($chid) no_channel_percent($nochannel_percent[$chid])");
            }
            else {
              _debug_echo("ad_channel_cache: channel($chid)");
            }
            break;
          }
        }
        // display ad on matching urls
        else {
          if (!empty($urls) && $page_match) {
            _debug_echo("ad_channel_cache: aid($aid) is valid");
            $valid_ads[$chid][] = $aid;
            if ($nochannel_display == 1) {
              $nochannel_percent[$chid] = $channel->no_channel_percent;
              _debug_echo("ad_channel_cache: channel($chid) no_channel_percent($nochannel_percent[$chid])");
            }
            else {
              _debug_echo("ad_channel_cache: channel($chid)");
            }
            break;
          }
        }
        // no match so we didn't hit a break, ad is not valid
        _debug_echo("ad_channel_cache: aid($aid) is not valid");
      }