Connecting to internet - problems!!

[Reece]

I have been trying for a few weeks to get my wife's computer connected to the net with no success!!
I have a 3G21WB router/modem, it has a wifi connection to BigPond ISP, not that that really matters, this router also has 4 LAN sockets one of which goes to my computer (LAN 1), this was the initial setup connection to the internet and worked well.
I have since connected my wife's computer via LAN (LAN 2), run "Network Setup Wizard" to connect via "This computer connects to the internet on my network through a residential gateway or through another computer", at the conclusion of this both computers connect OK, can transfer files, share printer etc but it will not connect to the internet.
Now if I run "Network Setup Wizard" and connect "This computer connects directly to the internet. The other computers connect to the internet through this computer", at the conclusion I just get an error message!

Funny thing is my computer is connected via "This computer connects to the internet on my network through a residential gateway or through another computer".
I'm starting to think that the Internet connection has nothing to do with LAN connections!
Most frustration since others (on another forum) have had no problems doing this but none can/will offer any help!
I don't see any point in running the BigPond setup disk since it is already connected to the internet, this would sets up accounts etc!
Any Help appreciated!