Go into a command prompt, and see if you can ping any Web sites- you should be able to, since they say you're connected. DO this:
Go to Start>Run: type "cmd" without quotes, and hit enter.
A black screen will appear.
Type in after >ping www.google.com
If you get replies, your connected to the Internet, and it's not a connection issue, but a browser issue. You say you have reset IE to all defaults. Try this:
Go into "Network Connections", right-click on the connection you have, and go to properties. Highlight TCP/IP Protocol (You may have to scroll to see it) and select properties.
Make sure that it is set to "Obtain IP address automatically" and "Obtain DNS automatically". If that is what it already says, try opening a the browser- IE
Go into IE, and make sure that it's not setup to go through a proxy server.
There is spyware out there that changes these settings, and you have to manually change them back. If they went through this with you, then you really have spyware/adware issues.
Try these suggestions, and post back.