Does this post help anyone?
http://winhlp.com/?q=node/31
Here is what it says:
Network/cable disconnected - Media Sense
Posted July 16th, 2007 by admin
When the network cable is disconnected, Windows shows a message like a "Network disconnected" icon on the TaskBar and the 'ipconfig' command shows a "Media State ...: Cable disconnected" message and disables the entire network protocol stack. This means that you cannot even reach network addresses on your own computer.
This is the normal behavior of Windows 2000 and XP. The cause is a new feature called Media Sense that disables the entire network stack if the cable is not powered.
In Windows since version 2000 TCP/IP supports Media Sense, which can improve the roaming experience for portable device users. Media Sense support, added in NDIS 5.0, provides a mechanism for the network adapter to notify the protocol stack of media connect and media disconnect events. Windows 2000 TCP/IP utilizes these notifications to assist in automatic configuration.
For instance, in Windows NT 4.0, when a portable computer was located and DHCP-configured on an Ethernet subnet, and then moved to another subnet without rebooting, the protocol stack received no indication of the move. This meant that the configuration parameters became stale, and not relevant to the new network segment. Additionally, if the computer was shut off, carried home, and rebooted, the protocol stack was not aware that the network adapter was no longer connected to a network, and again stale configuration parameters remained. This could produce problems, as subnet routes, default gateways, and other configuration parameters could conflict with dial-up parameters.
Media sense support allows the protocol stack to react to events and remove stale parameters. For example, if a Windows 2000 computer is unplugged from the network (assuming the network adapter supports Media Sense), after a damping period of 20 seconds, TCP/IP invalidates the parameters associated with the network that has been disconnected. The IP address(es) no longer allow sends, and any routes associated with the interface are invalidated.
Media Sense can be disabled if it is not desired. Please see the following Microsoft Knowledge Base article:
How to Disable Media Sense for TCP/IP in Windows 2000
http://support.microsoft.com/kb/239924/
However, you should first try to repair any hardware defect if your hardware indicates that the cable is not connected, when, in fact, it is connected. For example, swap the Ethernet adapter for a different one.