I am not sure what is going on here but I will describe the symptoms followed by the cure / workaround.
Then perhaps those who may have access to information can provide enlightenment.
After applying the latest patch bundle to the Novell Client 4.91 SP5 the following symptoms appeared.
Note NOVEAP.DLL patch had not been previously applied (Not using 802.1x, thus no need)
I was using two phase authentication from my desktop, I would authenticate to AD first and then invoke the Novell Client to authtnticate to eDIr as required. (This is related to our "Network" people having domain over internet authentication and 802.1x etc. Their solution requires AD authentication oin order to work.)  This has no bearing on the issue I am reporting so on to the point of the posting.

After authenticating to AD my workstation (Win XP Pro SP3) would end up with the Local Area Connection disabled.
It seems like AD authentication worked but it is possible that I would get on to the workstation only because of the "cached domain credentials" feature of windows which allows desktop access to a domain member desktop when the domain controller is not visible on the network but the user has presented valid domain credentials that match the cached ones. i.e the workstations was coming up with the Local Area Connection disabled from the get go.

The question was why was the workstation coming up with Local Area COnnection Disabled (All power management is off, no wireless on workstation) ?
If I manually enabled the Local Area Connection it I could then use the Novell Client to authenticate. Makes sense If you can see the network then you can authenticate.
So called solution:
I discovered that by manually registering noveap.dll (which came with the 4.91 Post SP5 patch bundle),  I could restart my workstation and everything worked as it was supposed to.
 i.e using "regsvr32 c:\windows\system32\noveap.dll" caused my problem to go away.

The question becomes why the need for the manual registration. ?
Why did the Local Area Connection come up disabled. ?

If someone knows the answer I would love to know
Thanks in advance