Problem was with Broadcom NIC drivers. This is the reason why network admins generally prefers Intel NICs over Broadcom. Following is the detailed procedure to solve this issue (Note that I have verified this procedure only Dell PE 1950, but it may work for other familities of Dell PE as well)-
NIC loses Static IP Configuration
What to do:
a. Uninstall old Broadcom Advanced Control Suite.
b. Clean the system of older Broadcom file versions.
c. Reinstall the Broadcom Drivers.
How to do it:
a. Download the new Broadcom drivers
i. 32-bit http://ftp.us.dell.com/network/Bcom_LAN_12.4_W2K3_8_A02.exe
ii. 64-bit http://ftp.us.dell.com/network/Bcom_LAN_12.4_W2K3_8_64_A03.exe
Important!
For Server 2008, leave all .Net Framework Versions in place, continue at step D.
b. Ensure Microsoft’s .Net Framework 2.0 SP1 is installed.
c. Install .Net Framework 2.0 SP1 from Microsoft.
d. Ensure .Net Framework 2.0 SP2, 3.0 and 3.5 are NOT installed. They can be reinstalled after installing the new Broadcom drivers.
e. Disable/Pause any Antivirus and Threat-Protection scanners that can interrupt the Broadcom driver installation.
i. Check for Symantec Endpoint.
ii. If it is installed, ensure Endpoint Patch RM4 (or newer) is installed.
iii. If RM4 (or newer) cannot be installed, then uninstall Endpoint. Endpoint may be re-installed later.
f. Extract BCOMRemove.zip
g. Rename the following files:
i. BCOM_Remove.txt -> BCOM_Remove.vbs
ii. BCOM_Finalize.txt -> BCOM_Finalize.vbs
h. Uninstall the existing Broadcom drivers through Add/Remove Programs.
i. Select No for restart now
j. Uninstall all Broadcom NICs and BASFND from Device Manager.
i. Click Start -> Run -> Type CMD.
ii. Type set devmgr_show_nonpresent_devices=1.
iii. Type Start DEVMGMT.MSC.
iv. Click View.
v. Click Show Hidden Devices.
vi. Expand the Network Adapters section on the left.
vii. Remove all listed Broadcom network adapters.
1. Right-click the network adapter
2. Click Uninstall.
viii. Expand the Non-Plug and Play Drivers section on the left.
ix. Remove all instances of BASFND
x. Expand the System devices section on the left.
xi. Remove all instances of BASFND
xii. Remove all listed Broadcom network adapters.
1. Right-click the network adapter
2. Click Uninstall
k. Double-Click BCOM_Remove.vbs
l. Reboot
m. Enable NICs in BIOS.
n. Cancel the Found new hardware wizard
o. Double-click BCOM_Finalize.vbs
p. Install the Broadcom Drivers
i. Double-click the Broadcom installer to extract the files to C:\Broadcom\w2k3_8.
1. 32-bit: Bcom_LAN_12.4_W2K3_8_A02.exe
2. 64-bit: Bcom_LAN_12.4_W2K3_8_64_A03.exe
ii. Navigate to C:\Broadcom\w2k3_8\Driver_Management_Apps_Installer
iii. Double-Click Setup.Exe.
iv. Follow the installation wizard to complete the installation.
q. For Domain Controllers, follow Microsoft KB article 325356 (How to remove and reinstall TCP/IP on a Windows Server 2003 domain controller)
r. For Non-Domain Controllers, follow Microsoft KB article 317518. (How to reset "Internet Protocol (TCP/IP)" in Windows Server 2003)
s. netsh interface ip reset resetlog.txt