OK, here's something odd. After I did that factory reset and got everything up and running, I loaded my old configuration file I had backed up.
I got the same problems I started encountering last night. So again I did a factory reset and used the setup disc again. This time, it worked! It went to completion. Weird.
I'm wired to my laptop right now and have an XBOX and PS3 wired, then wireless I have 2 printers 3 desktops, 2 iPhones, 1 laptop and netbook, 2 more XBOXes and a Wii. I home office but my kids game and each have an XBOX.
Will keep you updated, but I'm wondering what changed in my configuration to have me lose DNS server connection.