Okay my new friends, the mystery deepens. The Blue Cat5 that is plugged into that small box and into Port 1 of 2 of circuit 1 is the cable that is the cable I have in my router. For some reason my Dad thought it was a different blue cable and that were were hard wiring it into the POTS. The POTS wire is actually a gray wire that is wired into the smart jack box and appears to be on the AT&T side that is locked out. Here is a picture of both boxes open. If you notice a wet box its because we forgot to close it last night and it rained. OOPS!

So tomorrow I will try a different Cat 5. If that still has errors in the line then it's either the gray cable where I have to access to the other end because AT&T has that part locked or its my router needing to be serviced.

https://i135.photobucket.com/albums/q135/Kamakzie/IMG_15341280x768.jpg