Network adapter is hidden from the network and Dial-up Connections folder.

SYMPTOMS

When you trying to set the IP address on a network adapter, you may receive the following error message:

The IP address XXX.XXX.XXX.XXX you have entered for this network adapter is already assigned to another adapter Name of adapter. Name of adapter is hidden from the network and Dial-up Connections folder because it is not physically in the computer or is a legacy adapter that is not working. If the same address is assigned to both adapters and they become active, only one of them will use this address. This may result in incorrect system configuration. Do you want to enter a different IP address for this adapter in the list of IP addresses in the advanced dialog box?

Where XXX.XXX.XXX.XXX is the IP address that you are trying to set and Name of adapter is the name of the network adapter that is present in the registry but hidden in Device Manager.

If you click Yes, you see the TCP/IP properties where you can change the IP address to something different for the currently showing network adapter in Device Manager. If you click No, the IP address is assigned to the network adapter. Note that if you click No, the selected network adapter in Device Manager and the ghosted network adapter have the same IP address. In most cases, this does not cause any problems because the driver is disabled.

http://support.microsoft.com/kb/269155

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