Honestly I don't know exactly, because I'm not using more than one computer and i'm obviously not Freddie

But from my experience with HKN it does the following:

1. All 'structures' like 'If' and 'Toggle' are only evaluated on the PC you pressed the key on
2. All lines after an 'SendPC xxx.xxx.xxx.xxx' are directly send to the specified PC and executed on them

So for a realy simple hotkey like on PC1 (which is not 192.168.1.66):
<HotKey 1>
<SendPC 192.168.1.66>
<SendFocusWin>
<Key 1>

HKN would simply send the commands <SendFocusWin> and <Key 1> to the PC 192.168.1.66.
This would simply result in an '1' in the active window of PC 192.168.1.66 .

But what you wantetd to know is:
What happens if the hkn-file of PC2 192.168.1.66 has an Hotkey-definition like:

<HotKey 1>
<SendPC Local>
<SendFocusWin>
<Key 2>

In this case if '1' is pressed on PC1 it would not result in sending a '2' to pc2 beccause PC2 only recieves the commands <SendFocusWin> and <Key 1>, and not a command to trigger <HotKey 1>.

If you want that the <HotKey> on PC2 is actualy triggered you can do this by using this on PC1:

<HotKey 1>
<SendPC 192.168.1.66>
<DoHotkey Hotkey 1>

so by using this, on PC1 PC2 should receive a '2'.
Thats my 2 cents, but I think we better wait for freddie to clean up the mess i told you...