I feel your pain; no market downloads = no fun. This issue may be caused by a third party application conflict. Run the phone in Safe Mode http://goo.gl/xjIkW to confirm such conflict exists. If you are able to access the market and process downloads while in Safe Mode, you must identify the third party application and remove it. Unfortunately, there is no easy way to identify a bad conflicting application. I recommend removing all 3rd party applications and the install one by one and test for a while between installs. Keep us posted.
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