You *CANNOT* connect two computers simultaneously to the Cable Modem. Virgin Media only allocate one IP address and every computer connected to the internet must have a unique IP address.
Therefore, you must either set up "Internet Connection Sharing" in your flat mate's PC and connect with a "crossover" ethernet cable to his PC (or "wirelessly) or else install a *ROUTER*.
With a router, it is the router which connects to the internet and gets the single IP address. It in turn allocates IP addresses to the computers networked with it using one of the address ranges reserved for use in Local Area Networks, most commonly a 192.168.xxx.xxx range. It then "routes" the internet traffic to the correct IP address in the LAN.