Actually, I have similar issues. I installed SDK(1.5/1.6/2.1) on two machines. I found the internet connections is far beyond our direct sense. It should be working without any configuration in direct connect mode (like router). However, my installation result is listed as following:
ATOM / Windows XP
AVD 1.5: works
AVD 1.6: not available, console reports "NO DNS found"
AVD 2.1: not available, console reports "NO DNS found"
DELL D520 / Windows XP
AVD 1.5: works
AVD 1.6: used to work, failed without any prompt, however the 3G icon in status bar shows forbidden now.
AVD 2.1: works.
I checked DNS setup by "ipconfig /all", but emulator ignores my DNS setup as "unknown". The command I typed is:
emulator -avd and16_map_sd -dns-server 192.168.1.1 (this address is my router's DNS address).
I have recreate all the AVDs, it doesn't help.
Any suggestions?