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I wonder if the router in question has a similar fault? A quick search on google for linksys+disconnect+msn+firmware has bought up a few pages suggesting firmware problems.
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Yes, firmware could be the problem. I agree that the PCs are probably not the problem, but it helps to eliminate the obvious first.
What's the current version of the firmware? It should be displayed somewhere in the router web page. The latest version is 1.05.00. Here's the link to the firmware page if you don't have the latest version:
http://www.linksys.com/international...wid=183&coid=6
About reseting the router, I think the suggestion was to reset it to factory defaults. Usually, pressing the reset button just reboots the router with the current configuration. There should be a way to erase the current configuration and go back to the out of the box defaults.
When the connection does not work, are you still able to connect to the router's web interface? If so, maybe have a look at the status page and see what it says. You may have to manually configure one of your computers with a static IP address in the 192.168.1.x range.