ikegami and you are both right! It came to be a rather simple fix, but interesting still.

Here's what happened. When the last DST patch came along from Windows they did not have one for Win2k (non-paying that is). There was a 3rd party fix, that for whatever reason did not work, after I installed some security updates. I manually disabled the DST setting in my Windows Time, and simply dropped the time down an hour. Hence, the "is Daylight Savings" flag being zero.
When I turned on the "Daylight Savings" mode checkbox, my system jumps ahead an hour.

use DateTime;
use DateTime::TimeZone;
my $dt = DateTime->now; # same as ( epoch => time() )
print( $dt->hms, "\n" );
$dt->set_time_zone( 'America/New_York' );
print( $dt->hms, "\n" );
$dt->set_time_zone( 'EST' );
print( $dt->hms, "\n" );


#Results (With the DST enabled AND disabled..Doesnt matter).
01:10:49
21:10:49
20:10:49
[download]

This is more of a system issue at this point and not a Perl problem, but if anyone has any advice I would be appreciative.