Tim:
And have you stopped the NetworkManager service? If not, it could be saying that you're offline because *it* hasn't made a connection. Regardless of any other connections that are on.
Steven W. Orr:
I have *not* stopped NetworkManager but I will if you can tell me that's the right thing to do. If I run system-config-network, I can see that eth0 and eth1 are *not* controlled by NW. But it only shows me those two interfaces. Am I confident that lo0 is not controlled by MW?
If you're not using it to control your interfaces, then turn the service off, permanently. It's not needed.