Security Update KB942830 when installed on a Windows XP Pro PC stopped the network communication with the Virtual Machines within the box. The NIC inside the VM would show disconnected even though everything looked fine.
I uninstalled the security update, restarted the PC and the VM was back to normal.
This patch was automatically installed from a WSUS server which means if you have automatic updates setup on your computer, it should install it.
It does not appear to affect Server 2003 with VM’s. This patch is installed a on at least one Server 2003 server that I know of and the VM’s still communicate fine.
More information from Microsoft at:
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