I was having the same problem as the original poster. I could ping just fine but couldn't get IE or Firefox to connect to the internet. I also couldn't get other applications such as AVG to update.
I didn't think the winsock could have been the problem since I was able to ping but I downloaded the WinSock XP Fix from Spychecker (also available at many other download sites) and it fixed the problem! I was going to manually remove the winsock settings and reapply a fresh set, but the WinSock XP Fix did it much more efficiently.
I'm so glad I found this thread!