Hello John, First of all I would say that you are not experiencing any kind of _known_ Nimda affect. I am glad to see you report you rebuilt the machine and updated the patches with the system off-line - this is a far better approach since several different worms can invade a system (as you found) within a matter of moments.
I feel you may be having a problem with your DNS (I assume you meant DNS instead of DSN which is the U.S. military Direct Subscriber Network). There are several within these lists (alas, not me) who are very capable of helping you with a flaky DNS connection. Best of luck, Robert Kinsey Computer Security and Virus Analyst Veridian Information Solutions
