[aft_lizard]

I understand but the reason why I suggest disabling add-ons as a first attempt, besides being fastest first diagnosis is that alot of add-ons(such as AVG and Yahoo tool-bars) will install in both browsers and that can have an effect on the start up.

[Wooly]

I fully understand your point and if they were only having trouble with IE, I would say that also. But in this case they have reported that they were also having trouble getting on Firefox which is not going to have the same plug-ins.
The way I read this is that they suddenly started having trouble accessing IE and after reading some of the recent posts here or on the advice of others, they installed Firefox which worked until the malware was able to cut Firefox from accessing the Internet. Remember the malware is already on the computer and is running, so Firefox is not immune in this case.
This is probably some sort of a malware infection that was downloaded from accessing an infected website and now it has taken over the network settings. THe fact that it goes nowhere is not all that uncommon in the history of malware.
Believe it or not one of the best tools for removing this type of malware comes from MS and it is the Malicious Software Removal tool which is free to download.