Same problem. Another PC on my local area network does not have this problem, so it is not likely connection related.
1. XP
2. Linksys BEFW11S4
3. The default c:\prog files\rockstar games\vice city
4. I have tried both c\prog files\MTA and same as above +MTA
5. Yes, and deleted all config files, directories and all registry entries I could find
6. Yes, though the other PC on my network did not and it works just fine; even installed it over the top of .2.2
7. 1.0
8. It does not work, period
9. Yes
Just to add a bit of insight in case need be, its not that you cannot "see" anyone. You are in your own game when this is happening. No additional internet traffic is occuring from the time I am sitting in the client chat window to the time I start the game (so in other words no packets are going anywhere), and all of the vehicles start in there default positions, no matter what players on the server are doing.
Edit 1: I also thought it was odd that vehicles respawn instantly when I blow them up.
Edit 2: Obviously there is no one to kill, but if I commit suicide, the server does not give me a negative point, further evidence that when I am starting the game it not actually connected to the server, I believe.