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Its reported by various users that Windows XP service pack 3 causes problems to machines who have installed Norton internet security 2008. Once SP3 is installed the device manager apparently remains empty, network connections are not found. There are also reports that Norton’s security software no longer runs once SP3 is installed because the registry keys for the program are incorrect – containing several thousand interlocking entries that start with the string $%&'(. The software reportedly runs fine once these entries have been deleted.

Norton has put the blame on Microsoft saying that its some bug with the SP3. But they also have released a fix for the same problem. Norton is unable to explain why this happens only to their product.
My small advice to the readers is that uninstall Norton internet security 2008 before you upgrade to SP3.