Connect them directly with a crossover CAT5 ethernet cable. “Internet Connection Sharing” is then enabled on the actual Internet connection (the ADSL modem connection) in the “host” PC and the “client” PC will have Internet access provided the “host” is running and online.
When you enable “Internet Connection Sharing” on the Internet connection in the “host” PC, it automatically configures the Local Area Connection with the IP address 192.168.0.1 and subnet mask 255.255.255.0. The “client” PC’s Local Area Connection should be set to get its IP address automatically, which it does by DHCP from the “host”. Also, if you run the Zone Alarm firewall in your “host” PC, the Internet Zone Security level must be reduced from High to Medium or “ICS” traffic will be blocked.
To enable “Internet Connection Sharing” in Windows XP, open the Network Connections folder, right click the actual internet connection (modem connection), select Properties and then the Advanced tab. Tick the box “Allow other network users to connect through this computer’s Internet connection”.
This arrangement will additionally allow you to run File and/or Printer Sharing across the network.
If you are running any firewall software, it needs to be configured to allow access to the networked computers, often done by adding their IP addresses in the "trusted area".