4s Hotspot tethering only works with USB and BT but not with wifi

Question

Hi,
XP sp3 - iPhone 4s with ios 5.0.1 - on Three one plan
Tethering with wifi works to a friends Samsung phone, wifi on the pc confirmed working with the apple store wifi, tethering with USB and BT works with good connection speeds on my laptop but when i try to tether with wifi it connects to the laptop at 54mbps and all appears well, even claims to have received a small amount of data packets, but no data comes to any browser. The iPhone reports 1 connection to the hotspot and stays connected with a non-pulsing blue bar after the first minute.
In the PC i have tried this http://windows.microsoft.com/en-US/windows7/Change-the-order-of-network-protocol -bindings
I've deleted my firewall (zone alarm) completely and turned off windows firewall to go naked surfing for a second even though they don't cause a problem with USB tethering, makes no difference
I've deleted the network connection numerous times
"repaired" connection
dissabled and enabled the wifi
turned off the wireless with a hardware switch and on again
disabled bluetooth
rebooted many times
reinstalled itunes (latest)
loads more things i can't remember
This is causing me a nightmare. I've been through everything i can find online, been to the Apple store genius bar (genius appeared to have sub zero knowledge / interest as it involved a MS machine), been to a Three shop (legally not allowed to touch my PC apparently) and been to a Sony shop (laptop make, not their fault if my iphone doesn't work). All very frustrating.
Please help if you can! Any suggestion will be tried unless it involves sledge hammers or lakes, and only then for a few more days at most.

Answer 1

Turned off bluetooth on phone, turned off hotspot and on again, phone asked if i wanted to turn on bluetooth or go with USB and wifi only, said usb/wifi only. Still nothing. Rebooted PC and iphone. Turned on hotspot, pc seemlessly connects to network, still no data comes.
One odd thing is zone alarm asks me to "select a security zone for the wireless network at ip address: *******.0" every time and doesn't seem to remember the setting over sessions. When i get the status of the connection the ip address is *****.2 and default gateway is same ********.1 Not sure if that's anything.
Also getting a javascript error about an undefinded component (trustcheckermozilla) since i updated zonealarm but as i said even completely uninstalling zonealarm made no difference. I'll update firefox as well but tried with IE and still no data.