local access only - I hate vista lol

If it's connecting locally but not picking up a DHCP IP address from the router it's most likely to be the wireless security settings are incorrect. Nothing to do with DNS, HOSTS, Gateways - don't mess with them, they aren't broken! It's not a Vista issue either, it's an issue that's happening on a Vista system.
 
Any chance this has something to do with it?

http://support.microsoft.com/kb/928233

Run the fixit on that page, Vista is... finicky...

edit: noticed above martyn had the same link, let us know how it goes.
The machine does get an IP address via the wired connection, so this is not likely to be the problem. An easy test would be to assign a static IP address to the wireless connection rather than randomly downloading FixIts. The only 'finicky' thing with Vista was that it was the first to introduce IPv6 addressing which others have previously said is best turned off if the DHCP server does not provide IPv6 addresses.

Vista is a slow, disk-intensive system, but I've never experienced any significant problems with the networking stack.
 
I'd try deleting your stored network settings for the wireless network / try another wireless network. sometimes they get corrupted/typos and it stores the wrong thing. will say connected but is actually meaning wrong details.
 
I have seen this before, seems to be an issue with some routers and vista. Had a customer with the issue after spending numerous hours and research, changed the router out and had ni further issues.

If you ever see it on wired connection change the settings for the nic from auto negotiate to 100 full and it will fix it.
 
I'm with the last poster. I have seen this too with Vista and older routers/access points. It seems Vista is expecting some sort of exchange of information and if the older AP/router doesn't provide it then that's your symptom. The computer connects, gets the IP settings but won't go anywhere after that. When you look at the properties it says local only.

I had this happen on a Vista machine in early 2008. I tried most of what was suggested here with no success. Hell, I loaded XP on that same laptop to prove the hardware worked, which of course it did. But when I loaded Vista it was back to the same symptom. Search high and low in Google and found I wasn't the only one having the problem. Replaced the old router with a newer one and problem solved.
 
I have had this same issue twice in the past month, 1 HP laptop, 1 Compaq Laptop, both running Vista, though 1 had SP1, and the other SP2. Both had Atheros wireless cards. After futzing with the first one (HP) for three days, trying everything that has been mentioned to this point, could not get it to work, so did a factory restore to get it back to the client. Worked perfectly after factory restore.
Last week, my neighbor brought me her Compaq, stating that it would randomly restart while she was on the internet. When I got it on the bench to look at it, I connected to my wireless network, and again Local Access only. %^$%^$@^&@^%@^%......now starting to think there is a problem with my network. Ran BlueScreenView......found that the random restarts were being caused by the wireless card driver athr.sys. Tried to update the driver, and Windows told me I had the best one. Deleted the card from Device Manager, rebooted and it reinstalled the same driver. Still no Internet access. Found a forum after googling "bsod athr.sys" with a link to a new Atheros driver. http://forums.laptopvideo2go.com/topic/15297-atheros-modded-driver-for-windws-7-vista-and-winxp/
I downloaded it, updated the drivers for the wireless card, and after reboot was granted Internet Access.

Thought this might help here........
 
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