I dont exactly know your situation but heres mine, which looked a bit like yours, assuming you run 9.1. I had a perfect Slack 8.x and 9.0 running, but still decided to install 9.1.
With the old networking stuff, all I had to do was 'netconfig', enable all the options to be filled in by a simple DHCP request, reboot , et voila.
(I had 2 Nic's already then).
Now with 9.1, all of a sudden my old eth0 becomes eth1, and eth1 has turned into eth0. Why? I have no clue.
It drove me nuts for a day cause I didn't change any hardware setup, untill I took a closer look at the MAC addy and it turned out to be the other card.
Thats why it said my eth0 was down, because it was down.
I unplugged that utp cable from my other computer so I would hopefully have less problems.
So my advice to you in the end is ofcourse the general module checking, the simple /etc/rc.d/rc.inet1.conf and rc.netdevice editing, but I assume you already did that once and you know how to do that, cause you got it running before. If you compiled your kernel with built-in support, or built de modules and loaded them correctly and you still have the problem with the one NIC being down, take a look at the MAC, you might have the same weird problem I just solved.
It works fine here now.
Let me know if it helped...
p.s. Your ip can't be taken by another computer really. Well it can ofcourse, but thats the beauty of DHCP, it checks which ip is free, and if it finds one, it grants you the lease for a specific number of seconds/hours/weeks, etc.