I ran into a strange problem tonight. I have a Cinulgar 8125 Windows Mobile (WM5) phone. When I connected it via USB to my laptop (running Vista Ultimate), I couldn't get DNS to work on the phone. I was able to connect to any site by IP address, but DNS resolution failed. Of course, Exchange sync would fail too since it's accessed by DNS as well.
I was able do PC sync, copy files, install programs, and, again, passthrough internet worked, just not DNS resolution.
I searched on the google and I tried every possible thing I could find as far as settings are concerned, but nothing worked. One thing I kept coming back to, but kept blowing off, was this KB I found at Microsoft's site, but that dealt mainly with ActiveSync and the symptoms said that passthrough internet completely failed (it did not mention that only DNS failure might also be caused by this).
Silly me, it turns out that WAS the cause! Just an undocumented symptom. Here's the KB.
The only possible interfering LSP I can think that might be installed on my computer would probably come from Microsoft Forefront because I don't have anything like parental controls or third party firewalls installed.
So I have no idea what actual LSP is causing the problem, but strange DNS failures like this CAN be caused by one. So if you are suffering from the same problem, give this a try.
I hope MS can find a better solution to fix this problem in the future since disabling features (and possibly security if a particular LSP is enabled for security purposes) is never the ideal solution.