My computer is permanently connected to the Internet via a static IP
address. Every few days, my computer suddenly loses Internet
connectivity through applications such as Outlook and IE, but IM
applications, such as AIM and Yahoo IM, continue to work normally. The
other machines on our network do not experience this problem at all. I
tried using the ?repair connection? feature in Windows XP as soon as
the problem occurred, but that doesn?t solve the problem. The only
thing that seems to fix it is a total reboot of the computer. I?m
running Windows XP Home with SP1. I don?t want to update to SP2 if
possible.

Have you done a complete SpyWare scan??

I would suggest SpyBot Search And Destroy (FREEWARE)
Many users on our network complain of slow computers, once a spyware
scan completes and removes nasty pests machine performance improves
sometimes quite significantly.

I'd reccomend a few things. 

1. Upgrade your office applications to the newest upgrade at
www.microsoft.com/officeupdate (the only reason why I suggest this is
it seems that your MS Office applications are the ones causing you the
problem)
2. The spyware comment was a good one, I've actually not found a good
solution for spyware until last week.  Microsoft's beta antispyware
product is currently free to all users, and there's much rumor that it
will remain free. The url where it can be found is
http://www.microsoft.com/athome/security/spyware/software/default.mspx
3. Lastly, I'd search out updated modem drivers from the vendor of the
modem or your computer manufacturer.  It's possible that might also be
the culprit.

try fixing missing .dll issues or registry errors.  Freeware called
ccleaner from ccleaner.com does an excellent job.

Personally that doesn't seem to be a spyware problem to me. Is that
computer older then the rest? It appears your computer is either
getting too full of cache, or having dns connectivity errors.  Try
cleaning out your cache, if you don't know how to do that, the easiest
way is to go into my computer, right click on c, go down to
properties. Press the disk clean up button. It might take a few
minutes. Press ok.   If that doesn't work, when it goes down...
start
run
type cmd, press enter
ipconfig /release
ipconfig /renew