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There is nothing wrong with your modem. There are modems that when you turn it on, the wireless, dsl lights are green while the power light is red then after a few seconds, the green lights disappear and the red light will turn green. After sometime green light will come back on. This means your modem is restarting and doing a self check.
If the power light stays red, then you a have a problem with your modem.
I'm not exactly sure what you are saying, but if you need to hook up a cable or DSL modem to your computer, it is as simple as plug your RJ45 ethernet cable from modem into the ethernet cable port in back of your computer. It is the one that looks like a telephone line but it is larger. If your modem is working then that should be all you need to do.
Your All In One wants a phone line hooked directly to it. It won't fax without a "POTS" line directly hooked to it. POTS stands for "Plain Old Telephone Service" which is the line with good old dial tone on it.
The router has nothing to do with phone service - it's the modem that's plugged into the phone line. Unplug the modem from the phone line. If you don't get phone service back within 30 minutes, use a different phone to report loss of phone service to the phone company. (Depending on the company, it could take up to 30 minutes for the computers to restore service after a short has been removed.)
If that's the case - that unplugging the modem clears it up, call the phone company's internet tech support number.
What's happening is that the Cable modem is obtaining the MAC address of your PC. By unplugging the ether cable from the pc and plugging it into the router, the cable modem will not obtain the new MAC address. It needs to be reset by UNPLUGGING the power cable for atleast 30 seconds and reconnecting it again. I'd do the same for the router as a precaution.
Do a ipconfig at the command prompt and see if you are being assigned a ip from the modem. If not try rebooting the modem with the ethernet connected to modem and computer. then do ipconfig again to see if not getting internet ip, your card or modem eternet is bad. put in a new one and try again.