I have seen this "grayed out Network Manager" issue on a few Hardy systems.
In every case there was an interface other than loopback configured in 
/etc/network/interfaces.

Please verify that your /etc/network/interfaces file looks like this:
-----------------
# This file describes the network interfaces available on your system
# and how to activate them. For more information, see interfaces(5).

# The loopback network interface
auto lo
iface lo inet loopback
-----------------

-- 
Upgrading to Hardy Trashes Network Settings
https://bugs.launchpad.net/bugs/223263
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