I need to know if someone I'm chatting with can locoate the exact location I am in.

Not unless you are very savvy with the inner workings of Windows and are comfortable with command-line apps.

The closest you can get is the location of the ISP they use.

OK but how can I locate the ISP?

Once you get the IP of the person, you can use a WHOIS lookup to find the ISP that issued it.

Your original post sounded like you were concerned if someone else could find you. Is it you who are trying to find someone else? Because if I were chatting with you, I'd say it's really none of your business what my IP is or where I'm located, unless I choose to tell you. (Or unless I'm being dangerous, in which case you should be going through legal channels.)

No I wanted to know if someone else could find my location.. also in some cases it helps to know if someone I was chatting to was lying about their location. What I'm trying to say is that sometimes you have friends faking their identiy and the could be living in your own neighbourhood

People you chat with could be lying about all sorts of things. If they're faking their identity (other than using an online ID of course), then I would not consider them much "friends." And yes, they could be living in your own neighborhood.

Bottom line: just be careful.