This is a long shot, but run HijackThis and choose Scan Only. Now put a check on the these two items:
R1 - HKCU\Software\Microsoft\Windows\CurrentVersion\Int ernet Settings,ProxyOverride = *.local
O16 - DPF: {6F15128C-E66A-490C-B848-5000B5ABEEAC} (HP Download Manager) -
https://h20436.www2.hp.com/ediags/de...e/HPDEXAXO.cab
Now click "Fix Checked" and restart the computer when complete.
If that doesn't help, then I would take Randy's suggestion to format and reinstall XP again. When complete, don't install AVG, but rather Avira. Once that's done, don't install anything else, but rather report back with how the internet is performing.