In my experience the number one cause of noise on the phone line is having cheap phones and/or fax machines on the line. Also having an excessive number of devices plugged into the line will cause problems, as they all draw power from the line reducing the voltage available for the actual signal to be carried on.
Try unplugging everything in the house that is attached to the phone line except the modem you are using to connect, and plug it directly into the wall for this test. Then try adding the other devices back on one at a time to see which one introduces the most noise. I would be particularly suspicious of cordless phones. If possible use a USR modem, accept no substitutes, especially "softmodems". If internet activity produces CPU load, get rid of it and get a real hardware modem.
Myself, I use "
The Stick" to power devices on the line and handle switching tasks. It has a lot of dandy features, but I don't know if I'd fork out for a new one, I got this one for $5 at a yard sale.
Some surge protectors also include a filter for a phone line which helps protect against surges to the PC through the phone line but will not do anything for noise on the other side of it.
Also ensure the com port settings for the modem are appropriate, and check the parameters for the modem configuration button on the connection properties general tab and try various combinations of the "Enable hardware flow control", "Enable modem error control" and "Enable modem compresion" settings (generally best with all on if available). Also check the networking tab of the connection properties and under settings for the type of dial up server try enabling software compression and LCP extensions if not enabled. Also on the networking tabe try disabling any unnecssay protocols, TCP/IP is all that is required. Also check your modem settings for any weird init strings. If present, copy and save them somewhere and try removing them, or try a manufacturer reccomended one if any.