2) I don't think it's the server because after I've received that message on the desktop, I hook up the laptop and there are no problems connecting to the server. The fact that this box popped up with the Spyware Guard download and subsequent same message is what leads me to believe that it's a computer setting issue, not a server problem.
I've had defective modems that didn't recognize the phone connection while passing the diagnostic test. I've also had bad connections between the modem and the phone cable, and a defective phone cable. If you can connect a phone to the modem you can check to see if a dial tone is coming through to the phone. I was able to find a defective modem by doing this.
1) The modem could still be bad. PCI modems are not true modems and require proprietary drivers to work properly. Have you uninstalled/reinstalled the modem driver? If you have to replace the modem, I would replace it with an external serial modem. They are the easiest to configure/troubleshoot and connect at the fastest speed.
2) Don't know. When I encounter problems like this I just wipe the hard drive and reinstall everything.