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If you couldn't get a connection when connected directly to the modem it probably isn't the router and it would be unlikely for the router to fail in such a way that it screwed up your computers.
Though I suppose it is possible you somehow lost your login credentials for the DSL connection, but then you should be getting an appropriate error message.
Can you log into the router? If so, you should be able to change the channel you're using to hopefully avoid any conflict with your neighbor.
I assume you've tried this but you should power everything down (modem, router, computers) by unplugging when necessary. Leave unplugged for a minute or two. Then plug in the modem. Wait and make sure all the appropriate lights come on and stay on (you should have received a manual with the modem that will tell you what these are if you still have it). When this is done, do the same with the router. Only then turn on the computers.
If connecting to the modem didn't work last night and works this morning, I would guess that Verizon's DSL was simply down for a period and customer support wasn't smart enough to realize it. When it came back the direct modem connection works this morning but somehow your router isn't connecting correctly. Power cycling in the correct order usually works for me, but it is possible the router is fried, that did happen to me once.
But it almost certainly isn't in your computers since if it were you wouldn't be able to connect at all.
Another test you can do is if it works when connected directly to the modem, does it work when you connect directly to the router? I assume your wireless router has a few outlets for wired connections.
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