First of all, it would be helpful to check that you are doing this the right way. The starting point is the PC that you want to share from. Below is the procedure from XP help:

To enable Internet Connection Sharing on a network connection
You must be logged on to this computer as an administrator to complete this procedure.

To set up Internet Connection Sharing, run the Network Setup Wizard.
 Important

When you enable Internet Connection Sharing (ICS), the network adapter connected to your home or small office network gets a new static IP address configuration. Existing TCP/IP connections on the computer running ICS are lost and must be reestablished. For example, if Internet Explorer is connecting to a Web site when ICS is enabled, you must refresh the browser to reestablish the connection.

To use ICS, users on your home or small office network should configure TCP/IP on their local area connection to obtain an IP address automatically. For more information, see

To configure TCP/IP settings. Users on your home or small office network must also configure Internet options for ICS. For more information, see To configure Internet options for Internet Connection Sharing.

If the computer running ICS is using ISDN or a modem to connect to the Internet, you should select the Establish a dial-up connection whenever a computer on my network attempts to access the Internet check box.
 

Notes

To start the Network Setup Wizard, click Start, click Control Panel, and then double-click Network Setup Wizard.

For information about the protocols, services, interfaces, and routes that are automatically configured, click Related Topics.

Internet Connection Sharing is only available when two or more network adapters are installed on the computer.