Judging by ths thread it seems it's different strokes for different folks. After trying everything suggested with no joy, I finally fixed it by reinstalling my router. I have the router installed on an XP desktop, and I'm using a vista laptop.
Hope this helps someone else.

So here's my problem...
When I use my dial up modem to connect, vista says I have successfully connected, but I only get limited local access, evetually becoming full local access, but never internet access.
It worked in the past... one day coming out of hibernation this problem just occured... I don't remember changing anything.
There are no problems in the devicemanager, my wireless still works, and trying different ISP or phone line got the same result.
I can't think of anything else to try... any ideas?

If you go back through this thread you will see that this is a common problem with vista unfortunately. Try the suggested fixes, starting with the most straightforward, progressing to the more complicated, and see what happens. It would appear there is no, one, straight answer to the problem (apart from reverting to xp which was my solution for a new machine I bought at the weekend). Sorry I don't have a magic bullet.

Solved! - at least for my Nvidia 680i system. Same symptoms as others. Vista showed local and internet as connected. Network functioning correctly but would not load websites or retrieve email. I could ping google.com, msn.com, etc. so DNS was working. Read in this thread about Nvidia's Forceware ActiveArmor mobo firewall and found it in add/remove programs. Only evidence it was installed was here. Nothing in the program list and no access thru http://127.0.0.1. Ran the uninstall and I've had no problem for 3 days now! Hope this helps someone else. Strange thing is everything would work perfectly for a few hours after reboot and then internet access would just quit. Repair, disable/enable had no effect. BTW I'm using a wired connection behind a router.

I assume you have fixed this by now, but just thought I would post, I have a similar computer and had the same problem. My problem was an actual hardware failure. HP was still under warranty and sent in for repair. Actually I have a friend who has the same computer and had the same problem. I think HP got a bad batch of wireless cards.

I've similar problems with vista. I am able to connect internet from wireless, but after a while my connection turns into Local Only and there is not any internet access any more. My ip settings are correct and even during the Local Only error. I've updated all my network drivers and tried all the things explained in the forum like static ip, adding registery DhcpConnEnableBcastFlagToggle value with or without DHCPFixTool etc. However it isn't fixed.

I have to run diagnose and repair then Reset network adapter "Wireless Network Connection" every time it gets error and it is realy annoying, especially during downloads. This is fixing the internet for a while but eventually it is getting the same error again.

When I check the internet for solution, it is clear that vista has got some kind of a problem with networking and it is not cleary identified or solved yet.

I've DHCP server set up in my modem and I've not got any kind of internet access problem from wireless with different devices even from my pocket pc.

My laptop Asus G1S with Vista ultimate and my modem is US Robotics 9106.

When I checked the event logs it has got some errors but none of them is logged at the same time of the Local Only problem. One error is "The system detected an address conflict for IP address 192.168.1.1 with the system having network hardware address 00-C0-49-63-2A-59. Network operations on this system may be disrupted as a result." may be this is because of the static ip settings and another one is "The IP address lease 192.168.1.2 for the Network Card with network address 0013E8CDE637 has been denied by the DHCP server 192.168.1.1 (The DHCP Server sent a DHCPNACK message)."

Does anybody has got any suggestion that can help? Thanks.

I want to know what Windows update provoked this issue. The IT department I work for is upgrading to Vista sometime Q1 of 2008. I have given Vista many chances in the past, but thought I would try working through my issues this time... for the sake of experience. This issue is, by far, one of the most perplexing and frustrating issues I've EVER had to troubleshoot. I've tried every solution posted to this thread. Unfortunately, none of them work. What strikes me as very odd, is DHCP was working flawlessly yesterday. Now, I cannot resolve an address from any network (including my Sprint Novatel U720, which is supposed to be Vista compatible). I started fearing that my hardware might be to blame... So like any concerned user, I downloaded Ubuntu 7.10 and threw it in. Everything works fine.

Has anyone (even Microsoft) determined the cause of this issue? I feel it should be receiving much more attention than it is. I am truly shocked that Microsoft would allow an issue like this last so long.

What was wrong with Winsock in XP? It worked fine! Why did they feel the need to destroy it?

Any fixes or solutions at all would be great. I really love the aesthetics of Vista. The OS X-like features and thought that went into most of the OS (less Networking...) are great improvements on XP, but seriously, I need mah internet.

Fixes I've Tried:

*"Windows Vista cannot obtain an IP address from certain routers or
from certain non-Microsoft DHCP servers" (Translation: Broadcast flag
handling is broken).
<http://support.microsoft.com/kb/928233>

*"The default gateway setting is lost when you wake a Windows
Vista-based computer from sleep" (Translation: IP stack parameters
are being tweaked when going in/out of sleep mode)
<http://support.microsoft.com/kb/933872>

*"Windows Vista cannot connect to any off-link addresses when the
default gateway is configured to be the same as the client IP address"
(Translation: A commonly used method of preserving IP addresses is
broken).
<http://support.microsoft.com/kb/929824/en-us>

*"When a DHCP server is unavailable on a Windows Vista-based computer,
Windows Vista uses an APIPA IP address much sooner than Windows XP
does under the same circumstances"
<http://support.microsoft.com/kb/931550/en-us>

*"You cannot use a remote access server to apply DHCP options to a
Windows Vista-based computer" (Translation: Can't reliably get DHCP
leases through a VPN).
<http://support.microsoft.com/kb/933340/en-us>
---I tried their additional advice; adding keys for other interfaces, like wlan and ethernet

*There are a mess of other DHCP related "issues" (bugs) in the
knowledge pile at:
<http://support.microsoft.com/search/default.aspx?query=vista+dhcp>

(Thanks to Jeff Liebermann, 09/07/07 via google groups discussion...)

*Restoring to a point before all updates (in fact, I tried every single restore point available. Vista has only been loaded for 1 day.)

*Reloading hardware drivers
*Testing network connectivity with other devices (I'm using one right now...)
*Assigning static IP address on the network - this promoted me to Full Local Access, but still no internet

*netsh int ip reset <log.txt> - rebuild TCP/IP
*netsh interface tcp set global autotuninglevel=normal (i tried disabled and high too...)
*I've tried all registry hacks. I even tried the lovely tool developed by a thread subscriber.

The only things I haven't tried are:
*Loading XP
*Reinstalling Vista
*Teabagging the laptop (i.e., dunking it in a tub of water.)

I'm going to try reinstalling Vista. This issue is not one I've experienced in my past 2-5-day-before-reverting-to-OSX-or-XP-or-Ubuntu sessions. I have a feeling that one of the Vista Security Patches or HotFixes is responsible for this problem. *If someone knows, please provide your insight!!!!*

Thank you all; Mostly, thank you daniweb for this discussion forum. It's great!

I found the solution folks... Sadly it was very basic too.

1) Open up network and sharing center
2) The unidentified network has a "customize" link you can click.
3) Click the "Manage or delete network locations, DELETE ALL LOCATIONS, click next through the wizard like normal.
4)Right click on Command prompt under the start menu to run as administrator
5) route delete 0.0.0.0

FINALLY:
6) netsh winsock reset

7) Reboot.

Profit

Winsock was corrupted
http://grdead.ibloggie.com/reset-tcpip-and-winsock/

Does this work? I'm experiencing local only problem in Vista. I'm not a computer expert, so im a bit afraid to do something which may corrupt my system intirely. Is this the final solution to the problem?

I would hesitate to suggest anything could be the 'final solution' (for several reasons) but nothing in the above thread could actually cause any harm (unless it involves a direct change to the registry, in which case extreme caution is advised). As I said above, it would be worth your while to go through the tips one by one (from easiest to hardest according to your level of comfort) until one of them works. There is no obvious way of predicting which one will work for you I'm afraid, but one of them will!