Look up Ubuntu or a live CD of linux to boot up and see if it works ok. We still need to look for spyware but the linux livecd lets me test the hardware independently of the OS issues.

Scan the machine with Malwarebytes (free at http://www.malwarebytes.org/mbam.php ) and from MS...

"1. Rebuild the Winsock LSP chain. To do this, follow the steps in the "Resolution" section of the following Microsoft Knowledge Base article:
817571 (http://support.microsoft.com/kb/817571 ) You receive an "An operation was attempted on something that is not a socket" error message when you try to connect to a network
2. Test each of your third-party programs that are known to use LSPs.
3. Reinstall any malfunctioning third-party programs that are known to use LSPs."