If you have enabled ICS on the USB Modem connection in Computer1, Windows will have given its "Local Area Connection" the IP address 192.168.0.1 with Subnet Mask 255.255.255.0 - there will be no Default Gateway or DNS Server address on this connection.
The "Local Area Connection" in Computer2 should be set to get its IP and DNS server addresses automatically, which it does by DHCP from Computer1. When ICS is enabled in a "Host" PC, it *DOES* act as a DHCP server to allocate the addresses to "Client" PCs.
Client PCs will get an IP address in the range 192.168.0.2 to 192.168.0.254 with Subnet Mask 255.255.255.0, the Default Gateway and DNS Server addresses will be 192.168.0.1 (the IP address of the "Host" PC).
Although Windows XP does support multiple Workgroups, file sharing will be simpler if you use the same Workgroup name in all computers. Set any folders that you want to have available over the network as "Shared" by right clicking and selecting the Sharing & Security option. Configure any firewall software to allow access to the networked computers, which may involve adding their IP addresses in a "trusted" section.