The bug is not theirs from what I see. It's well discussed but don't count on MS issuing a patch unless they distribute binaries for Zone Alarm and who else?
More at http://forums.cnet.com/5208-6142_102-0.html?forumID=5&threadID=300621&messageID=2808407
As the other Mark has already written, the latest XP update does stop all Internet Activity on many machines. Mark's solution, using a restore point is great and will quickly get you back on-line.
I'd just like to add, that the update, will re-appear repeatedly unless you select the 'Custom Install' radio button of the 'Up-Date box'. Then be sure to un-check the updates, then click close and (if prompted), tell it 'not to remind you' of the up-dates again.
Hopefully, on the next round of up-dates from Microsoft, the problem will have been dealt with?
Also, see the other "Mark's" posting for the additional information offered via the links he has provided.
My phone hasn't stopped ringing as a result of this problem.
p.s. If you do decide to remove Zone-Alarm be 'sure' to enable the built-in Windows firewall at the very least, as you should 'always' have this basic protection running.