Is the modem a pc card or internal to the laptop? Sound like it may be a bad modem. I had one do the same thing. It would connect but not disconnect.

Thanks for the reply. It is the original internal modem that came with the laptop (Conexant...). I updated the drive for the modem and troubleshot the modem with no luck. I can disconnect form the dial up, however I have to reboot the laptop (restart) before I can reconnect. It appears that the connection goes through, but the Internet Explorer and Firefox do not recognize the connection (working off line).

I recently had a live chat with Dell Tech Support and they suggested to install the Windows XP CD in the laptop and perform a system repair. I hope that is going to solve the problem. Any other ideas or suggestions are welcome.

If it is indeed a defective modem, a system repair or restore won't help. Give it a try though. You could also try a different phone line and jack. I've seen simular problems caused by a bad phone jack or wire. If all that fails, get another modem and see if it works correctly.