Take a look at this
Microsoft ICS(Internet Connection Sharing tutorial .
Forget about manual IP addresses, they're not the solution here. Also, you setup ICS on the computer with the Internet connection, NOT the other one.
On the second computer that doesn't have the Internet connection, try this.
TCP/IP stack repair options for use with Windows XP with SP2.
Start, Run, CMD to open a command prompt:
Reset TCP/IP stack to installation defaults. netsh int ip reset reset.log
Reset WINSOCK entries to installation defaults: netsh winsock reset catalog
Reboot the machine.
You will need a cross over cable for this as well!!
