Could it be a Firewall issue?
To test you could try using a Live CD of some sort (eg Ubuntu)? Download and burn the ISO image to CD.
Boot from the CD, it sets up a ram drive with all drivers loaded up for the network, you should be able to connect to the internet with the browser provided.
If you don't like linux, you can download
Bart PE. It uses the files from an original XP installation disc to create a Live CD. Again, boot from the BartPE CD created, open a dos window and run the ping command to your router...
Boot CD, accepting the the defaults to the dialog boxes
Go>Command prompt (CMD)
at the dos window prompt type...
ping
192.168.0.1 -n500
(
192.168.0.1 being the address of your router)
If you are unable to do this then its possibly an O/S independant problem, and you may have a hardware failure