Can't share internet with iPhone4 via Airport with MacBook Pro on Ethernet

Question

I'm in Iraq being abused by a criminal ISP offering 256K (yes, kilobytes per second!) connectivity via a cat IV ethernet cable to my MacBook Pro (OS X 10.5.9). I have a first-gen iPhone4 (16G, version 4.2.1), it will not connect to the internet via airport to my MacBook.  I'm getting a good wi-fi symbol on my iPhone, the Airport is correctly finding my MacBook's network, and it properly demands/accepts my WEP password.  But I cannot get mail, go on line or use any apps. 
Under the DHCP tab on my MacBook's network on the iPhone's Settings/Wi-Fi page...I have a good IP Address and Subnet Mask.  Previously I've also had numbers show up on the Router and DNS lines as well...but they are now blank.  I have never had numbers on the Search Domains or Client ID lines.
Can anyone tell me what's missing to get my internet sharing working?
Thanks!

Answer 1

OK, on your iPhone you have four fields that need to completed for any type of WiFi networking to operate.  The fields are (in order) the IP address of your device, the subnet mask for your network, the "router" IP address, and finally the DNS addresses.
I'm not sure what these numbers look like on an ad hoc network, but a typical router based network would look like: 
Device IP:  192.168.1.x with x being between 2 and 255
Subnet mask:  255.255.255.0
"Router IP":  192.168.1.1
DNS:  usually a pair of IP address separated by a comma.  Sometimes this is supplied by the network you are conneccted to, other times you specify an address (like OpenDNS or Google's DNS service)
If your phone has an IP address of 169.x.x.x, it means that your ad hoc network is not supplying it with an IP address.  Make sure that the DHCP box is checked (the ad hoc network will assign an IP address) or manually assign IP address.
To be honest with you, I'd go out and buy a basic N router (about $40 US), plug it in to your ethernet connection, and connect your devices to that.  You get far better security as the router has a firewall and you can use WPA2-AES encryption on the wireless side - and it is easier to set up.