I think i got it..
For now try this and tell me if it works.
adb into the phone and do the following
# /system/bin/pppd /dev/smd1 &
# ps w
Look for the rild service and kill it
kill <pid> <--- pid is the number shown when you do a "ps w"
Now that you have that look at your logcat and you will see pppd firing up. Try to browse the web and let me know how we cookin