can’t release ip 169. in XP

I have an desktop Windows XP Professional that autoconfigures it’s IP to 169.
The DHCP is working fine (tried two, DHCP in linksys and cable modem) with other PC’s.
I can set the XP PC to a static IP (same as the router would grant) but no communication. I can ping the rounter and the DHCP sees the mac addresses of the PC.
Unless static IP is specified the autoconfig will be granted. DHCP, auto DNS and WINS are enabled.
I’ve tried netsh reset to reset the TCP stack and another to clear the ARP cache and they seemed to worked but had no effect on the problem.
I will be reinstalling XP in a few days if I get no further help.