Hmmm just a thought. I run NIS 2004 --- but it does not have the worm detector. I also have sp2 --- firewall is normaly disabled --- I have enabled the firewall on a few occasions, but as long as it configured properly does not interfere with LW. NIS 2004 also has a firewall.

I'm thinking it may have something to do with this new worm detector Norton anit-virus has. Have you tried disabling norton anti-virus to see if LW would connect?