As far as I know, I don’t think you can use localhost as an API server.
Please remember that all external collections’ requests go through Adalo backend anyway, so localhost isn’t an option.
Of course you can use localhost with your own API server for testing purposes. But this works for local environment only.
What I was trying to explain that it won’t work with Adalo, as Adalo servers transfers all requests to the collections via itself.
As Adalo servers are located in the Internet, they won’t be able to access your computer via localhost address.