You should see the raw dump right away from http server in the telnet window. Pretty much as soon as you type 'GET /' then enter it should dump a bunch of data back or even an error. And after re-reading what I told you I think I left out the 'enter' bit. But if it just sits there it is like it is timing out. Which any of the sites you mentioned should not be doing. What sort of 'ping' response are you getting?
Is there anything in the IE proxy settings? It may not even be that and they are snagging the packets as they exit the local ISP router and just putting them thru a transparent proxy anyway for you. I have been considering setting up something similar for my local network to simplify setup.
Do you have another computer you can attempt this from? Or a console like the PSP/PS3/WII that can surf the web? This will isolate if it is the network or your computer.
Also the fact that they have something like the settings you disabled really makes me think they are using a proxy server in the mix. You may need someone other than the first level tech support if it is inside their network.