Internet Connection Problems

I am losing my internet connection every 15-20 minutes, reboot computer and everything is fine for 15-20 minutes. I am using Verizon DSL with a model 2100 Westell modem connected to USB( No wireless router). Running Windows XP Professional with McAfee Personal Firewall and McAfee anti-virus( up to date), use Firefox browser.Verizon says everything is ok (line test, checked all connections, modem not plugged into power strip ect...)and to check for spyware.I have followed instructions in removing spyware per Major Attitudes 6-22-04 post(was unable to run Trend Micro). After completing all this I got one hit from McAfee when I ran virus scan.....Suspicious file....C:\System Volume Information\_restore{2B507572-11AA-404F-8113-B02CBC21CC94}\RP313\A0048622.exe

Also when I run disk defragment, I get an error message when Analyzing is 95% complete. Error occurred in file C:\System Volume Information\_restore{2B507572-11AA-404F-8113-B02CBC21CC94}\RP276\A0047303.L I can not defrag after this.

I am pulling my hair out and going to run all tests again today,any suggestions would be appreciated. By the way, have used this site for several years solving problems, you are the best!
Thanx,
Mav