Thanks edk, your description of the setup is close...but not quite.
We have one desktop (XP-Pro) connected directly to the Motorola modem which never seems to loose connectivity. This modem is connected to cable (not ADSL). My computer (XP-Pro) is about 11m away in the backroom of the house. Sometimes the internet connection works for hours without a problem. Other times you can be using the internet for some time, and then it just drops out. Sometimes it comes back automatically in seconds, sometimes it takes a minute or so. Other times, the icon on the task bar gets a red cross through it. If you right click on it and select "Repair" it disconnects from the USB modem and connects again, usually successfully. Sometimes it fails. If you unplug the Motorola modem and plug it in again (no power switch) the connectivity often returns, sometimes not. In a couple of cases when the connection has dropped out I have turned the laptop on (Vista) in the back room. In all cases it does not connect if the desktop could not also get connection, it says "there are no wireless connections available". If I bring the laptop up to within a couple of metres of the Motorola it still says there are no connections. If it does connect, I will find that my desktop will have also reconnected.
It appears that the RF transmission side of the connection is "flakey". It is just a matter of how much of my life do I want to spend on the phone (again) going through all the usual BS and trying things you have tried before without success or get stupid suggestions like "you should turn it off when not in use" (so why doesn't it have a power switch?) or "are there any objects that could be interfering" (what, over a distance of 2m?...other than air!). It took nearly a month for the new modem to arrive and a couple of hours to get it working again, only to find the same problem, but I think the first modem was better