Are you sure that eth0 is the LAN and not the WLAN interface? iwconfig will tell you. I'd really love to see this laptop in person as I own two T60's with the same hardware and I know of three others using Hardy without a problem. Everything works, Live CD and all.

Instead of giving up, let's troubleshoot this systematically. Put the CD in, boot it up all the way, and let's see what gets modprobe'd. Please open a terminal, before doing anything, and run:

Code:
lsmod | grep e1000
lsmod | grep iwl
ifconfig -a
...and post the results (or a summary) here.