as far as locating a computer with an IP address, it is indeed possible to a degree. It is the same way a packet is able to be routed to your computer. It has to make certain hops to get there, and it goes through certain routers.
it is actually really easy.. programs like traceroute will easily track what routers a packet will go through to get from point A to point B, but you just need to know some of the major routers and you can generally pin it down to a region of the world. try xtraceroute and it will give you a nice graphical map of the world and show you the lines that designate the --hehe family guy-- path taken by the packet.
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