avoiding hacking ???

I was recently hacked into on my 98se , with all patches , running a firewall and AVG free ver. with updates .
Long story , but I ended up reformatting , or attempting to reformat the HD since I could not get the Registry changes they had made to stay undone .

ANyway , my pc mfg, helped me reformat , but they neglected to tell me that I had to go into internet options and click on nevr dial out .Actually , this is the default so not sure how that happened . I did have a cable modem attached and , unknown to me , the phone plug was still in the computer from when I used to use dial -up.

No , a friend is helping me to refomat again. I am going to be using DSL with a router , but need more help from him to get it started .

I have not installed the drivers for the 56k modem and there is no phone plug in the computer now .
He told me not to install the modem drivers because we would not be using that - we would hook up the DSL modem when he comes over in person.

I used a 98SE update disc from MS to load the patches without having to go online, and they included a disc from EZ Trust with a firewall so those are in.
Now , my question is : Is it at all possible that they can hack into me using the Internet Connection wizard to dial out since I do not have the phone plugged into the computer ? He tells me no - don't worry, but they got in before and now I am a wreck.

I am typing this on the libraryr computer now and I cannot wait for him to get some free time to hook up the DSL modem and router .

I did install the spyblaster 3.2 but it would not run - saw the error message on another forum and it said install the latest Virtual Machine , something or other from the MS site and that may be ok now that I was able to update all the patches with the security CD Micorsoft sent me .

I really love going online but I want to feel safe and enjoy the experience .

Any advice against hacking and how to prevent this from happening again after my clean install and new DSL modem are hooked up would be much appreciated!

Thanks