How can I supress horizontal rules in newlfm letterhead?

Just add these two commands to the body of your document:

    \noHeadline
    \noFootline

The width for those rules is given by \@Hrw (for the header rule) and \@Frw (for the footer rule), so it's enough to set those lengths to zero:

\documentclass[orderfromdateto,sigcenter]{newlfm}
\usepackage[T1]{fontenc}
\usepackage{baskervald}
\usepackage{lipsum}

\newsavebox{\Wlogo}
\savebox{\Wlogo}{\parbox{6in}{\Large WILLIAMS COLLEGE \hspace{5mm} \normalsize
WILLIAMSTOWN, MASSACHUSETTS 01267-2693}}

\makeaddress{WillPhys}{
\addr{ \parbox{3in}{\begin{flushright}\emph{DEPARTMENT OF PHYSICS} \\
  33 Lab Campus Drive \\
  Williamstown, MA 01267 \\
  (413) 597-2482 \end{flushright}}
}
\name{Michael Seifert}
}

\makeletterhead{Williamsltr}{%
 \setadrfr{\adrWillPhys}\Lheader{\usebox{\Wlogo}}%
}

\lthWilliamsltr

\makeatletter
\setlength\@Hrw{0pt}
\setlength\@Frw{0pt}
\makeatother

\begin{document}
\greetto{To Whom It May Concern,}
\closeline{Sincerely,}
\begin{newlfm}

\lipsum[1-2]

\end{newlfm}

\end{document}