Thanks for the reply Edward.
This in not my network, but one of our partner factories. The computer in question actually runs an advanced analysis software for our production line. It is the only Win 7 box in the factory as it is what came with "package". Even with the DNS errors I can still view LAN computers. The administrator (if you call him that "useless") has setup the gateway to authorize internet access via IP addresses. So he manually assigns IPs to each box, then setup the gateway to allow this IP access. He told me there is no way to setup DHCP. This works fine with Win XP boxes, but not with this Win 7 box. This network is large and I have no say in its configuration, so I need to find a way to make this box work.
This Win 7 box works fine in my office where IP and DNS are assigned by DHCP router.