I found the problem to have been caused by spyware, adware and the like.. Unfortunately there was too much cr@p on the PC to pin down which bit causes it. But anyway I resolved the issue by removing as much spyware as possible without a net connection, then re-applying service pack 2. Once SP2 was re-applied the IP problems were resolved and I could then do online scans and update defs etc.
All seems well for now.