Sorry for the delay in replying guys. For the record here are my PC specs. Let me know if I'm leaving out something:
Router: Linksys WRT54G
New Home built PC with non-functioning multiplayer:
Windows XP SP2
512 MB memory
110GB SATA HD
Norton AntiVirus 2003 (Updated)
Mobile Athlon XP 2500+ (overclocked)
Plextor 712-A DVD +RW
Tried PTW 1.27 and C3C 1.22
Laptop with non-functioning multiplayer
Dell Inspiron 8600
256MB memory
40GB HD
Windows XP SP2
Intel Pentium M 1.8 (Newer 745 I believe)
eTrudt EZ AntiVirus 6.3.0.9
DVD+RW
Tried PTW 1.27 and C3C 1.22
PC with functioning multiplayer:
MicronPC Millennia RS2100 (I Know, I know don't abuse me...)
512MB memory
30GB HD
Windows XP SP2
Celeron 700mhz
Norton AntiVirus 2004 (Updated)
CD-RW
PTW 1.29
The kicker is on my homebuilt it DID work originally (connected to a router) and then a few weeks later the problem showed up. I'm don't think it's related to SP2 since it works on the Micron but I could be wrong. There might be a DLL or something that loaded on the homebuilt that isn't on the Micron from SP2.
Chipper_30: I am behind a router so the first thing I tried was unplugging my ethernet cable and TADA the problem went away. Big thanks to you my friend!

Just so everyone is aware the Micron IS connected to the router but PTW works fine in multiplayer so it may be a combination of ports, software and router.
Ginger_Ale: I did some troubleshooting in comparing the different services that were running between the Micron and the homebuilt. I shut off every service I could on the homebuilt but the problem remained. Tried turning off AV and turning off the SP2 firewall and nothing worked.
I solved the problem on my laptop by disabling the wireless connection to my router.
I don't play over the internet but if I did my next step would be to look through the ports as chipper_30 suggested.
I reported this problem to Atari tech support and of course they were less than useless (Uninstall/reinstall was there solution). But I do recommend everyone seeing this issue submit it either by phone or email. We should at least get a patch to take care of this!
