|Well, this forum turned out to not be at all useful to me, but in the event someone else stumbles across my post, I figured I would follow up and let you know the solution to my problem, which I figured out thanks to a colleague at work.|
It turned out the built-in network card in my PC had failed. Very strange because in Device Manager, it claimed the device was working properly. I updated the NIC card driver, and that had no effect. I download antivirus defs and anti-spyware software from another PC, burned them to a CD and installed them on the other machine that wasn't working. I ran Microsoft's anti-malware tool, Norton AV and other tools; all of them turned up no viruses or malware.
I pulled a network card from another desktop, installed it in the ailing machine, and when I started it up, the PC recognized the network card, without my having to install any software. I set up a new network connection using the network card, and unlike past attempts to configure a network connection (see point #3 in post above), this time when it completed, Windows said it needed to restart the computer. When I restarted, it just started using the new connection, and I have access to the Internet again.
So, this turned out to be a hardware failure. The thing that made me think this might have been a problem with the network card was that I went to Start->All Programs->Accessories->System Tools->System Information. From that app, I went to the Tools menu and selected Net Diagnostics. I then told it "Scan your system." Before I put the replacement NIC card in, it showed no information for the Network Adapter, which I thought was odd. When I put the new NIC in, it behaved a lot differently, showing me the NIC card info under Network Adapter, and running more tests having to do with Internet connectivity.
If you run into something like this, try going through these steps.
I was SURE this was a virus. It didn't help that Device Manager insisted the non-functioning network card was enabled and working properly. That bogus error sent me on a scramble looking for apparently non-existent viruses. Very annoying. It's also disturbing that System Restore failed to work. I guess that's an unrelated issue.
Hope this helps.