I'd be very surprised if ActiveX is your problem, these are hardware drivers causing the problems and ActiveX is software applications to make websites more interactive. I'm running SP3 on our laptop, using a wireless connection (the only one that does now), and it is working perfectly.
Vista draws heavy criticism and deserves very little of it and most of it comes from people that have never used it. Vista is a fine operating system, especially on new machines, and the small niggles that were there have all been addressed now. I'm digressing but we use Vista for all of our live and recorded TV without problems (well except for those caused by our 23 month DS finding the off switch!)
I'd just say that any cheap laptop is cheap because they have cut costs somewhere, the Vista licence is a fixed cost so to make it cheaper they have to cut hardware, normally in the amount of memory (Vista needs at least 2GB), graphics, and processor speed.
I'm frustrated because I'm certain I could get this working if I could get my hands on it. You said that after SP3 the windows software wasn't there but if you are using the built-in XP wireless software then it must be. If you are using anything else then this might be causing your problems.
Ideally we want to install this wireless card using the drivers only so lets try and do that. Can you post the exact product number and I'll try and locate a drivers only download for you. Then we can get the wireless adaptor installed and be certain that the built-in XP wireless software is the only part controlling the wireless connection.
There is a way to block SP3 from installing via automatic updates here but this will only block until 12 months after the release of SP3. As long as you install all other updates then you will be OK since SP3 added no new functionality and mainly just rolled up previous updates into one package.
I'm certain we can get this working although sadly we can't rule out the possibility that this is an old machine and so might really be in need of a fresh Windows XP install to wipe out anything affecting this process.
Mr Debscee (who thinks that Mrs DC is very clever with computers and more importantly she is a really fab mum and wife)