Unconnected with the OPs particular problem, there is a bug in the DHCP handling in windows XP that seem to have been introduced since SP3. It seems windows assumes that the parameters will come from the router in a particular order, and gets confused when they don't. Hence with some routers some parameters get ignored if not supplied in the expected sequence. This often results in things like DNS details not being correctly assigned.
There is a patch for it, but for some reason they have not chosen to roll it out on automatic updates.
Different routers seem to have varying levels of sophistication when it comes to remembering previously assigned details or allowing one to manually preset assignments. Some are quite limited.