You can certainly use DirectX for this task, but depending on your aspirations you may find it's overkill compared to other 2D API's. You have to use Direct3D for 2D rendering - whilst it is an extremely powerful approach (free blending and transformation) not everyone likes the extra 3D-like code that goes with it.

Do not use DirectDraw or DirectPlay. Just don't. Please. [smile].

DirectInput could be used, but only if you want to support legacy gamepads. Use regular Win32 for mouse & keyboard and then XInput for XB360 controllers.

DirectSound is a little tired now but still a viable option, look out for XAudio2 in the near future and explore XACT for a more high-level audio solution.

Use Windows Sockets or another 3rd party library for networking. Again, do not use DirectPlay.

hth
Jack

.NET support is being dropped in the next SDK, and even then the 1.1 libraries are pretty old now... You can use them if you like, but you might be better off checking out community efforts like SlimDX (see the sticky at the top of this forum).

hth
Jack