I have been able to create this problem at 2 seperate sites (just to confirm some suspicions after working on the problem for most of the day)

This is the breakdown of the 2 sites::

Each has a SME Server (V5.6), one runs in DHCP, the other using Static IPs.
Each Site has both Win98 and WinXP Machines (Home and Pro).

The SME Servers are setup to be server-gateway and are both connected to broadband connections.

If I setup the Computers to static IPs and configure the Gateway to 192.168.0.1 (the IP of the SME Server),

the win98 computers do everything correctly, local browsing and Internet access. however the winXP computers can access the local network without error, even web-browse the server and admin panel, but do not get any internet access.

Re-configure the XP computers back to the DHCP and all works ok again.

I then tried another experiment, I configured the server to be a DHCP and let it configure a WinXP computer (using IPCONFIG I took note of all the settings), I then narrowed the range of the DHCP server to exclude this IP as part of it's issueing and manually set the same figures into a WinXP and a Win98 Computer (1 at a time of course!), the XP machine could browse local network and the server-admin but no internet access..

The Win98 computer worked perfectly, I-net browsing and email all worked correctly.

Please help.. as one of these XP computers needs to be IP Static for other purposes.