When you PING a computer on the same network segment, you receive Request timed out.

NET USE, and other network functions, appears to work normally.

PING (and TRACERT) uses ICMP packets. Chances are that your NIC is corrupting ICMP (Internet Control Messaging Protocol) packets. If you did a network trace, you would see that the CHECKSUM field on the ICMP header looked similar to:

ICMP: Checksum = ERROR: CheckSum is 0x4B5C, Should be 0x8B5C.

To correct the problem, replace your NIC.