hey-zeus,
Its hard to point a finger at a single cause. I suspect that one of the public proxy server sites which sets up a proxy server without needing any change of settings from your side, is the cause of the problem probably installing some malware of some sort.
The problem magically disappeared when i upgraded my OS inspite of retaining all of my prior settings and files. Run an intensive malware scan and see if the problem gets fixed.

When i reset my router to factory deafults it worked again for a day or so, kinda annoying to set up the wireless every time...

If you're use firefox you should have downloaded and installed the Ultrasurf addon. After doing so there will be a "WJ Disabled" in red at the bottom right of the browser. Simply click it to enable or disable. When disabled you can access the internet without having to run Ultrasurf in the background. What it does is switches the browser's connection settings between "No Proxy" when disabled, and "Manual Proxy" when enabled.

I know this thread has been marked solved, but seeing as there hasn't been an actual solution posted for the problem, I wanted to post it for anyone else who comes upon this thread looking for a fix to this problem. Hope this helps.

Well, the problem is that internet won't work without ultrasurf. utorrent, Firefox (with the addon turned off), IExplore, Spotify... Nothing works unless Ultrasurf is turned on. It also affects my Ubuntu partition and other computers who use the router and never had Ultrasurf installed. It must be some configuration Ultrasurf creates in the router, since it works for a while every time I restore it to factory settings.

I came across this thread while looking for a solution to your problem.

http://www.giveawayoftheday.com/forums/topic/5851

Apparently ultrasurf is malware. I've been using it for a while now and never realized what its been doing using my own computer. Its most likely responsible for your problems too. My guess is its forcing you to use it every time you use the internet so it can do what was described in that thread. I always thought it was to good to be a free product.

Pretty nice thoughts added, needs no further addition..!!

Eileen..
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SNIP