Well I have no knowledge of AVG, after all this is the avast forum ;D ;D
Why are you using AVG (I hope your not using two resident AVs) ?

Some malware like newdotnet hooks into your internet connection settings and if it isn’t removed correctly it can cause you to lose your internet connection. So I have no idea what AVG did or if it didn’t remove the LSP hooks causing the connection to fail.

You could visit the web site with the computer your using now and download the lspfix tool and using a floppy/cd/or usb drive copy it to your other system.

For XP SP2, try Windows Start button, Run - type ‘netsh winsock reset’ without the quotes - this may be enough to fix the issue.
Check out this topic http://forum.avast.com/index.php?topic=21608.0, for non-XP SP2 systems http://cexx.org/lspfix.htm download the file and transfer to your system and run it there.