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Is there a way to use Group Policy to disable Internet access?
Not that I know of. You could, I suppose, force in a bogus proxy server name. That will confound most users. But the savvy ones will skate by. The proper term is "Policy Setting"... a Group Policy (Object) is the thing that contains policy settings. To answer your question in full, you'll need proxy server like ISA server which honors group membership for Internet access.
Updated answer: XP Service Pack 2 to the rescue! When it comes out, it will have a Policy Setting called Restrict Internet communication which will do just this! It will be found in Administrative Templates | System | Internet Communication Management. Enjoy!