I had the same problem...its AVAST. I could not connect to the internet, but if you disable the Avast On Access Protection...IE7 has no problems with internet connections. I wonder if this is an IE7 issue with Avast or Vista? Have you installed IE7 on an Xp system and run Avast? Does it work?
I've installed IE7 on XP with Avast and my internet connection had no problems.
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