Limited or No Connectivity & Unable to contact dhcp server

A friend's computer of mine can no longer access the internet. He is running Windows XP Home with service pack 2 installed and all updates as of 12/2005.
I suspect some spyware adaware or virus took it out.
I ran microsofts antispyware
Adaware SE Personal
Spybot & Destroy
All spyware has been removed

AVG Antivirus lists no more suspected files.
I looked thru all processes in the taskmanager and no unknown things are there.

It was getting the message unable to contact dhcp server.
I was getting the classic 169.254.x.x
I did an ipconfig /release * and ipconfig / renew
No change.

I did a repair on the network connection. No results.

I deleted the network device from the device manager to reinstall drivers. No luck.
I ran this program that usually fixes tcpip stack for windows xp based systems
http://www.snapfiles.com/get/winsockxpfix.html

I also ran lspfix
http://www.cexx.org/lspfix.htm

I then decided to give the computer a static ip address.
I also gave it the dns numbers.
This resulted in the limited connectivity change to connected.
The network status shows that packets are sent and received.

I know the cable and integrated network is good because I used the same cable on another computer and the integrated network connected via a dos based diagnostic program.

If I ping the machine using ping 127.0.0.1 (loopback) it does send/receive all packets. But if I ping the router 192.168.1.1 it will not receive any packets saying request timed out.
I reset the router and it is set to share up to 50 users only 4 computers in the building.

Also the windows file share will not share files.

The machines windows name is visible on the network.
The windows xp firewall is turned off and there is no software firewall installed.
Any suggestions besides reinstalling the operating system?
Windows System Restore was turned off on this machine. No restore points.
Thank You
Greg Manhart

 

Perhaps your LAN card driver has been hosed. Unistall the driver & install again.

 

I tried uninstalling the driver from the device manager and reinstalling the drivers that didnt help.
Thanks for the suggestion though.