Can't create airport/wifi internet-sharing network with other laptop

I have an iBook running Tiger 10.4.11 connected to the net with ethernet. The internet connection comes through a radio antenna which acts like a router to which I don't have access.
I want to share my internet connection, and to be able to transfer files, between the iBook and another laptop. I've tried it with two - one running Fedora 11 (mine) and one running Windows XP, and have the same problems with both.
I turn wifi on on the ibook and linux laptop. I turn on internet sharing from built-in ethernet to airport in System Preferences. First I try it with no encryption. 'Other settings may interfere with internet sharing' shows up; it tells me to enable Personal Web Sharing, which I do. When I click start Little Snitch tells me natd wants to connect to 10.0.2.1 (presumably the router in the antenna), which I allow. I try to connect with the linux laptop and it tries then disconnects.
1) isn't personal web sharing for serving web pages? — why is it necessary here at all?
2) what am I doing wrong in making my network work?
If I enable encryption using WEP, the other password asks me for authenticication, I put in the password, and it then tells me the network has been disconnected.
3) is WEP the best encryption I can use from Tiger?
4) I think the problem's with Tiger (both laptops can connect to other wifi networks not set up by me). Is there a piece of free software I can use to share the connection instead of the built-in one?
I can't make a functional network in reverse either (i.e. setting it up on the other laptop and trying to connect wirelessly with the ibook).
What I am trying to do is precisely this (http://my.safaribooksonline.com/0596009135/runmacx2-CHP-11-SECT-13) — it just doesn't work.

When I click start Little Snitch tells me natd wants to connect to 10.0.2.1 (presumably the router in the antenna), which I allow. I try to connect with the linux laptop and it tries then disconnects.
Back on that part, at that Point the Mac is a NATD Router, don't try to connect to the other computers.
On the Mac, with Internet Sharing enabled, open NetInfo Manager in Applications>Utilities.
From there on out, it's a bit foggy, but iirc Config>DHCP>Subnets><the subnet>, then down where it says com.apple.nat... what does it report for IPs?
If it were say 10.43.29.1 then the others trying to join should have that as a Router/Gateway, and then 10.43.29.2, 10.43.29.3, etc. as IPs.
Apple says you can't set it Manually, but I've had it work a couple of times.

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