> What timeouts?  Where are these set?
options -> flow.
My dialup defaults were timeout=60, retry=9

I also remembered having a similar problem back in win 98 days.
Couldn't connect to the email server. Even tried the command line:
telnet smtp.mail.yahoo.com 25
and got a could not connect.
You could try a 
telnet SITE 80
and see if telnet can connect and/or if you receive a error.
In my case, even with Norton shutdown I couldn't. But after a reboot,
everything was fine. Try reboot