Internet Connection Sharing + File Sharing

I have Win XP Pro on my Desktop and Laptop.
They are both connected wirelessly.

After a lot of headache, I managed to get the file sharing to work by inputting 192.168.0.1 and 192.168.0.2 on my desktop and laptop respectively. I entered those in the Wireless Network ~ Internet Protocol Properties.

Now I can see and browse both computers through "View Network Computers" in "My Network Places".

However, no matter how much I change things, I can't share the Internet from the Laptop.
I even ran through "Set up a small home or office network". All that did was to remove the 192.168.0.2 IP on the laptop and replace it with something else which would then cause the ICS to work but the file sharing to stop working.
Additionally, it would place a firewall on the Internet Dial-Up connection (on the dektop). I think that placing a firewall on the internet connection defeats the purpose of letting the network computer share the internet.

I even tried stopping and stating ALG in "Services" (on the dektop).
No matter what I do, I can't get ICS to work.

I ran "Set up a small home or office network" on the Laptop and it did give it a new IP address which was set automatically.
This did make ICS work.
A side effect was that file sharing stopped working. I could no longer see both computers in "View Workgroup Computers".
So it's one or the other.

When I had this network running some time ago (before I updated and formatted my computer), my network was running fine and I didn't even need to assign 192.168.0.1/2. If I could, I'd like to go back to doing just that. Is there any way to let the computer assign it automatically whilst having the file sharing and ICS working in harmony?

So how do I get ICS and filesharing to work in harmony?
Appreciate the help.
JH