If the modem works well enough to pick up the line and determine that it's (supposedly) busy, then the modem is working just fine.
It's more likely a dialler (dial-up-networking) problem, than anything else.
Go to Add/Remove programs, Windows tab, and remove DUN. Restart the computer.
Go to Start > Run > and type in inetwiz and create a new connection. Be sure to edit the Advanced properties to put in the correct DNS numbers and such.
Next, go to the properties of your new connection, and disable all protocalls except TCP/IP, and UNcheck "Log on to network".
Try connecting.
If you get any error msgs, post them back here, and we'll get your friend on the net.
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Who needs a life?, I have
internet!
Cheers, Jim
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Jims Modems