Windows 7: LAN does not have a valid IP configuration

is the router set to dhcp?

How will i check that?

You will have to log onto the router(obviously from your neighbours hous/pc) and check that ips are dished out and not manually set - what was the ip on your laptop? was this manually set? If you just plugged in and went with the laptop then there is a setting on your PC stopping communication - usually a firewall....

see my first post... its automatic. Assigned by my ISP

I think we are missing something here. Your ISP will give your internet connection an IP. (external) but your router will give you a local IP. ( something like 192.168.1.12 for example) this is what you are missing... the 169..... address you supplied usually points to a lack of physical connection and is generated internally by your pc... if the network cable works on your lappy and you just plugged this in and it was ok then there is something else blocking the communication/functions of the network protocols. Possibly a firewall...

I have tried disabling the firewall too and no fix. Will re-installation fix my problem?

I will not have access to the router. As the owner is not comfortable to give me time to look at it.

What firewall are you using as simply disabling sometimes wont be adequate (especially if its something like endpoint etc)?

Oh nothing like that. Its just a PC. So I use only Windows Firewall

Just reading through the posts again. Can you just clarify these points;
1. your pc is connected by cable directly to a router.
2. you had a laptop connected on the same cable/connection and this worked fine.

Yes both of your points are right