thanks for the explanation regarding how you test. I wasn't certain how you were testing.
I've connected to a database here and then shut it down (I have the power!) and then, on session->test Connection, I get the following window in about a second:
I do not get any attempted connections to the internet to check the KB or the Forums unless, I click the button shown.
However, it sounds, from your latest posting, that your colleagues with direct access to Toad don't have the same problem that you are suffering from - so they appear to be seeing what I see - a quick response. his would tend to pint the finger at the Terminal Server as the potential culprit.
I checked the various Toad Options and there doesn't appear to be one that determines whether to automatically search the internet for error details or KB advice.
It appears from John's updates on your other problem, that you are suffering from a bug in 10g when the user's account has expired and you cannot connect to change the password.