If you promote the limited user (temporarily) to an administrator, can they connect?
What, if anything, is showing up in the Event Viewer?
Is System Restore any option to revert back to when all was well?
See the fixes mentioned here.
WinXP Connectivity Issues
faq779-4625
See if the links or ideas in these threads offer any clues?
Lockdown Internet Explorer
thread779-928546
Help with Disabling user internet access on home pc
thread779-714122
Is it all connectivity or just browser connectivity where you have this problem?
Make sure your options in IE/ Tools/ Internet Options/ Advanced are correct.
Try running temporarily with the check box "Enable Third Party Browser Extensions" unchecked and see how this goes.
"This specifies that you want to disable features you installed for use with Internet Explorer that may have been created by companies other than Microsoft.
If you encounter problems with Internet Explorer that you cannot resolve, you can use this option to help determine if third-party features are causing the problems without uninstalling the feature. You must restart Internet Explorer after turning this option on or off."
Internet Explorer Fix
Run the System File Checker program from the Run Box by typing.....Sfc /Scannow in it and have your XP CD handy.
HOW TO: Verify Unsigned Device Drivers in Windows XP
If they don't work you could try repairing windows by running it over itself. You will lose all your windows updates but your files will be untouched.
How to Perform an In-Place Upgrade (Reinstallation) of Windows XP (Q315341)