Without a trace, its hard to guess at what might be happening. First
guess is...
 - the 7960 defaults to registering every 600 sec (SIPDefault.cnf)
 - your firewall next to the 7960 has a short udp timeout value and
   drops the table entry
 - * can't ping it (regardless of the qualify setting) as the firewall
   is blocking the path

My 'sip show peers' is like:
Name/username    Host            Dyn Nat ACL Mask             Port     Status
3021/3021        216.223.173.111  D          255.255.255.255  5060     Unmonitored
3020/3020        216.223.173.111  D          255.255.255.255  5060     Unmonitored
3015/3015        217.15.121.42    D   N      255.255.255.255  5060     OK (193 ms)
3014/3014        217.15.121.42    D   N      255.255.255.255  5060     OK (193 ms)

where the 3015 & 3014 exten's are qualify=yes. They are behind a
Linksys FW.

Not sure why your display is not showing port 5060 though.

You might change the SIPDefault.cnt to something like 120 to see
if that impacts it at all.

You said there was an "option to unlock the MGCP function".????

The most common way to unlock a 7960g is to go to the main menu, then scroll down till you see "Unlock Config" and try your passwords there.

If this fails to unlock the phone then first we want to get rid of the network settings so it stops trying to contact whatever random MGCP server you mentioned.

Try **# either at the main screen or while in a menu screen. This should at least unlock the Network Configuration submenu, and in there you can find "Erase Network Configuation". That should wipe all the server information back to 0.0.0.0. Then save and let it restart (or, force it to restart).

Finally

•  As the phone is starting up, immediately press *and hold* the # key.

•  Keep it pressed. The phone will flash the three lights for headset, mute, and speaker.

• When the speaker light turns off, release the # button.

• The phone should flash all three of those lights again. I believe it will keep flashing them for 60 seconds, which indicates it's waiting for you to do something.

• Enter 123456789*0#

• If it worked, the phone should ask "Keep network cfg?" with options for yes or no. Depends on your exact circumstances, I guess, but the safe answer is probably always "no". Remember, you can always input that stuff again later, but making sure it's gone also ensures that nothing in those settings is screwing you up. You want the phone as clean as possible before you start to work with it.

the phone is locked. I have tried the following action but with no luck:

Tried performing a factory reset  by holding down "#" as it powers up

then i dialed 123456789*0#.

This does not work at all.  It is trying to get information from a MGCP source at 64.2.21.61 on port 2727. It never recognizes anything I type (like # or the 123456789*0#)

When I go into the menu display, there is an option to unlock the MGCP function. I have tried several passwords ("Cisco"; "cisco"; Cisco4321"; etc) but still can not get it. I can telnet to the set but I do not have the access password.

The TFTP server does have a valid SCCP image it should try to boot to but doesnt .

You can only use pre standard POE Cisco Switches with that phone.

Your netgear switch gives Power IEEE 802.3 10BASE-T
IEEE 802.3u 100BASE-TX
IEEE 802.3ab 1000BASE-T
IEEE 802.3z 1000BASE-X
IEEE 802.3x full-duplex flow control
IEEE 803.3af
IEEE 8021.Q VLAN (128 groups, Static)
IEEE 802.1p Class of Service (CoS)
IEEE 802.3ad Link Aggregation (LACP)p
IEEE 802.1D Spanning Tree Protocol

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Cisco 7960G phones only support Cisco inline power,no IEEE 802.1af power.

You must use a cisco switch that provides pre standard power.  This is a small

disadvantage of the 7960 series phones.