Which version of Internet Explorer (6,7,8 - I doubt you have the finished version of 8, it was only made available a few days ago)? Have you checked LAN proxy settings? Have you tried a different browser, Portable Firefox run from a USB drive for example, if you can't access the internet to download anything on the machine itself? Using a third-party firewall? Lots of things to consider....
To check proxy settings;
Open Internet Explorer.
Click the Tools button, and then click Internet Options.
Click the Connections tab, and then click LAN settings.
If "Use a proxy server for your LAN" is ticked, untick it.