I'm not increadibly computer savvy, but I've thrown together a couple Windows machines before and never had this happen.
In short, I installed a new HD. Installed Windows XP Home, and the DSL software. Got on the internet with no problems and started installing all the XP updates that precede SP2. Rebooted, got on the internet and downloaded SP2. Now during installation, the computer locks. I reboot, uninstall SP2, go on the net and reinstall SP2 with no problems. Then I reboot. Now, I have a Local Area Connection indicated that didn't exist before with a Little or No Connectivity error, and I can't get on the internet. The system is also searching for an IP address.
I thought it might be the Firewall settings. When I checked it, it was indicated as being turned off, and the settings were locked in a Group mode. I don't know if this issue is a result of the other or totally unrelated.
I uninstalled SP2, rebooted and everything worked fine. Reinstalled SP2 and the problem returned.
Then I started over by reinstalling Windows and the same thing occured exactle as described above.