I do not know of an answer to this. I am posting to say I too had this problem today (twice too), and reversed it with system restore as you did. I have XP SP3 and use the latest version of Firefox as my browser (though I couldn't connect with IE either).
Having added the above, I notice there is another thread on this with more helpful answers (Loss Of Connectivity With Kb951748 And Avira Antivir, Just reporting loss of internet access after update install).
Probably best if you look there before adding to this thread.
Edited by Nigel_95, 09 July 2008 - 04:02 PM.