Connected to internet via ethernet but server not responding

I have browsed some threads on this topic but none gave me an answer, and my set up is not quite the same as those that I've read. I don't want to hijack another thread and confuse the readers. I would be very grateful for help on this issue.
I have connected a G3 imac to a G5 imac with ethernet cable and both are configured for file sharing following the instrauctions on this help site. Both machines communicate and file sharing is okay.
Now I want to share the dial-up internet connection of the G3 with G5 over this ethernet connection. I have configured both machines following instructions on this site. At the moment file and web sharing is enabled on both machines.
In sharing preferences/internet internet sharing is turned on on the host (the one connected to the internet)
In sharing/firewall personal web-sharing is checked on both machines
In built-in-ethernet/TCP/IP config IPv4 is off on both, although i have tried it with IPv4 set to using DHCP on the host, and then on both
No proxies are set
I have tried it with Appletalk both on and off on both machines
In network status internal modem is at the top of the list on the host and ethernet is at the top on the guest and both say that they are connected to the internet. The ethernet appears as connected to the internet with green light even when the host computer is not connected to the internet.
Yesterday I was able to browse using IE in windows XP running on virtual PC on the guest (G5) but this is the only time it's worked and I don't know what i did for that to happen. I only wanted to run a software activation on the G5 but the message unable to establish a connection appears.
I followed the help in virtual PC to share the Macs internet connection with windows, but havn't been able to connect to internet using the browsers on the OS X system. Tried altering browser preferences as well with no joy.
Everything works fine on the G3
I don't know where to go next.
imac G5 Mac OS X (10.4.3)

Teecee,
You may want to re-post this is the "Internet, Networking and your iMac G5" Forums to get more relevant and better informed answers as pertaining to your issue and your particular model.
Here is the link to that area of the discussions:
http://discussions.apple.com/forum.jspa?forumID=880
This forum is for "Using your iMac (early 2006)" models (or Intel CD) and this venue may not quite provide the insight and background you need for your specific model and problem.
Hope you get the help you need there...

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Tough to troubleshoot lightning in person, moreso at a distance!
Things to try...
Type 17.112.152.32 into your browser... thinking it may be off looking for a DNS server that doesn't exist.
Launch Network Utility and see if you can Ping like that addy, or your other computer.
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Connected to internet via ethernet but server not responding

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