If I have a host list here:C:\WINDOWS\system32\drivers\etc\hosts for blocking malicious,& ad websites/servers. How do I make it work with Tor?
It works normally with Tor and without any configuration.For example, when your browser are trying to find IP of https://en.wikipedia.org/wiki/Domain_Name_System ,it will check hosts(this file in C:\WINDOWS\system32\drivers\etc\hosts )first,if the IP is in here,then job done.
You are censoring your internet, and then using Tor to get around it.
If you don't need to be able to access hidden services, then you can set your browser to use Tor to connect but not for hostname resolution. However, this will expose your DNS traffic to your ISP (and DNS provider if not the same).
Edit to add:
See here: "Tor does not use your local address resolving facilities because..."
Your best solution is probably to use MapAddress directives in your torrc instead of using a hosts file.