have you tried reinstalling hl and or esf or both ? it mite be that your esf installer may be screwed (it gets like that when there are heaps of people tryying to get the dam file at once , just like when 1.2 1st came out , that was as hell to get a working install for some people i remember) as far as i know , 1.2.3 soes no chane wat so ever to the client dll , just map fixes and a new map (esf_arrival , nice map , even thou i don't play on it much)
EDIT: just get steam if u intend on playying online , in my opinion it works better on steam , plus if you intend on getting evm , get steam coz it was tested on steam and may not work on won , if you are unsure on how to set hl up on steam , just go to the steam site , there's forums there and faqs