Nothing is absolute, however after 9 hrs of browsing that day, this solution worked for me. None of the steps in my solution can corrupt your system anymore than those registry mods.

This solution worked like a charm for me. It also saved me the headache of formatting.

If anything, try running cmd prompt as administrator (rightclick on the shortcut and select "Run as Administrator) followed by entering "netsh winsock reset' followed by restarting your computer.

Tried mpeters13 recipe, however still "local only" and no internet. I guess there are versions of this problem caused by different malfunctions in Vista. I have also installed the latest firmware in my wrt54g router, however with no luck. Also tried to connect with a cable, still no luck. My troubleshooting have convinced me that the problem lies intirely in windows vista. My XP laptop connects flawlessly to internet.
I will try to connect directly into the modem, just to rule out a compatibility problem with vista and my router. Hmmm, is it possible that my cable-modem (terayon) could be incompatible with vista?
Well, will post here if i encounter any solutions.
Thanks for all help!

That's a shame . The biggest issue I had was that regardless of the connection medium (lan, wireless, sprint aircard or dialup) I could not pull a proper IP address. I kept getting automatic private addresses (169.254.xxx.xxx)/24.

What IP address are you getting when you try connecting to the given network? Are you getting a proper automatic private address (192.168.xxx.xxx)/24 and subnet, or whatever IP you range your service provider serves?

Additionally, did you run those commands as administrator? Like mentioned, there are many cases and causes for this problem, unfortunately.

For all I know, it could have been a combination of the tips from this thread that worked.
The first try I did was run the DHCP tool someone wrote in this thread. Then I reset tcpip, disabled auto-tuning, deleted the route, cleared ALL vista stored network locations, reset winsock. I hope you are able to find a fix.

OMG-Everybody here is missing the actual problem.
This is BY design. Microsoft is trying to help you by turning the connection to local access only because it sees an invalid domain name in DNS. Most people do not configure a DNS domain for their wireless router. In some cases it is detected as invalid even when present.
DO NOT TURN OFF IPV6, DO NOT UPDATE THE FIRMWARE ON YOUR WIRELESS ROUTER, DO NOT UPDATE YOUR LAN DRIVERS, DO NOT EDIT THE REGISTRY.
While all of these things may or may not solve the problem you are using a billy club to swat a fly.
SOLUTION:
Delete your connection from the view wireless connections page or connections page, use the Microsoft wizard "connect to the Internet" to re-create your connection, and from this point on it will use that connection as an INTERNET connection. Seems that when you use the "connect to" or the auto detect wireless function in Vista to connect to a wireless network, Microsoft assumes you need help identifying the role of this connection an when the DNS validity of the connection is invalidated it sets it to Local access only.
For instance if you are in an active directory domain MYDOMAIN.LOCAL it will help you out and change this connection to "local access only"
I have no idea why Microsoft chose to do this accept to promote commercial wireless hot spots which all just so happen to have 100% properly identified DNS and never show up as "local only"
I have properly identified DNS on my wireless network so my Buddies VISTA machine works fine on my network, but at home it will not work and says "local access only" this is how I discovered this Vista helper bug.
Remember this is By DESIGN and there is actually nothing wrong when it says local access only accept the fact that this network has improperly identified DNS.
Never put in Mannually DNS servers because when you go to a hot spot your Internet won't work because you may have DNS port 53 blocked to local access only and your manually configured DNS server will not be reachable from the hot spot network.
Remember to use the "Connect to the Internet" wizard to build INTERNET connections in Vista, either that or have a Cisco CCIE configure wireless router to the level that Vista expects for an Internet connection. The other solution is to FDISK and go buy XP Pro and reload with XP Pro as it does not try to help you determine Internet Access and availability.

Thanks for the clearest explanation of this problem I've seen anywhere. Why on Earth do Microsoft not publicise this 'helpful' feature so people are alerted to it as a potential problem?

Thanks a lot kidputer. This is propably the reason for "Local Only", I've done what you've defined and I 've got any Local Only until now. However I've still got a connection problem. Even if my connection stays as "Local and Internet" after a while, I couldn't get any response from my connection. It just stopped without showing any problem. Is there any relation with the swithing off IP6 or previous registry update etc.

Can anyone fix my problem. I have a fixd connection to a Netgear router (new at MS suggestion) and have had the LOcal Access Only problem. On log on my network shows up with an unidentified public network in tandem. Like some evil twin I can only get rid of one by disabling the other. I then reinstall the connection and the problem resolves, the evil second unidentifed network disappears and I am left with my one network connection. My vista laptop connects beautifully through the router. MS research department (yes the real eggheads) spent hours on remote access to my computer trying to fix the problem. My ISP wasted just as much time getting nowhere. I have bite marks all over my desk but after installing a new card, router and cable MS say: reinstall vista. Grrrr.....

Here is the printout of my IPCONFIG/all if it helps
Microsoft Windows [Version 6.0.6000]
Copyright (c) 2006 Microsoft Corporation. All rights reserved.

C:\Users\test>ipconfig /all

Windows IP Configuration

Host Name . . . . . . . . . . . . : Zoostorm
Primary Dns Suffix . . . . . . . :
Node Type . . . . . . . . . . . . : Hybrid
IP Routing Enabled. . . . . . . . : No
WINS Proxy Enabled. . . . . . . . : No

Ethernet adapter Local Area Connection 2:

Connection-specific DNS Suffix . :
Description . . . . . . . . . . . : Realtek RTL8169/8110 Family PCI Gigabit E
thernet NIC (NDIS 6.0) #2
Physical Address. . . . . . . . . : 00-1B-2F-3C-C8-39
DHCP Enabled. . . . . . . . . . . : Yes
Autoconfiguration Enabled . . . . : Yes
IPv4 Address. . . . . . . . . . . : 192.168.0.4(Preferred)
Subnet Mask . . . . . . . . . . . : 255.255.255.0
Lease Obtained. . . . . . . . . . : 28 January 2008 21:14:25
Lease Expires . . . . . . . . . . : 31 January 2008 21:14:23
Default Gateway . . . . . . . . . : 0.0.0.0
192.168.0.1
DHCP Server . . . . . . . . . . . : 192.168.0.1
DNS Servers . . . . . . . . . . . : 192.168.0.1
NetBIOS over Tcpip. . . . . . . . : Enabled

Tunnel adapter Local Area Connection* 10:

Media State . . . . . . . . . . . : Media disconnected
Connection-specific DNS Suffix . :
Description . . . . . . . . . . . : Teredo Tunneling Pseudo-Interface
Physical Address. . . . . . . . . : 02-00-54-55-4E-01
DHCP Enabled. . . . . . . . . . . : No
Autoconfiguration Enabled . . . . : Yes

Tunnel adapter Local Area Connection*:

Connection-specific DNS Suffix . :
Description . . . . . . . . . . . : isatap.{39C1AD59-F2CF-4D2B-853F-71B575FC5
8D2}
Physical Address. . . . . . . . . : 00-00-00-00-00-00-00-E0
DHCP Enabled. . . . . . . . . . . : No
Autoconfiguration Enabled . . . . : Yes
Link-local IPv6 Address . . . . . : fe80::5efe:192.168.0.4%11(Preferred)
Default Gateway . . . . . . . . . :
DNS Servers . . . . . . . . . . . : 192.168.0.1
NetBIOS over Tcpip. . . . . . . . : Disabled

C:\Users\test>^A^A

C:\Users\test>

Can you pls tell me how to delete the wireless connection? The delete button is grayed out.

Yes I have the same problem - the disconnect facility will not work because Vista thinks that my network is the only active network.