Having problems sharing internet Connection from Macbook to Vonage Adapter

Hello,
I just got my Vonage adaptor and I am trying to share the Internet connection from my Macbook Pro (10.7.3) to the Adaptor to use the Vonage service bc my router is downstairs.
I turned off my Firewall, hooked my Vonage adapter to the Macbook with the ethernet cable and then went to Sys Preferences > Sharing > Selected Internet Sharing > Share Connection from Wifi to computers using Ethernet, and it looks like everything is ok but when i try to use the phone which is connected to to Vonage Adapter, it says "Your Vonage device cannot connect to the internet, check to see if your high speed internet is down".
I went and looked at my Network preferences and it shows Ethernet connected which is the Vonage Adapter and gives the following:
IP Address: 169.254.163.167
Subnet Mask: 255.255.0.0
Is there something Im doing wrong? Ive seen on several forums that its possible to do but having bad luck. Any help is appreciated.

All I know is that I got Ubuntu to share internet and offer IPs through DHCP by using Firestarter. I am very new to Solaris, however, and am looking forward to learning about it. I've just made it my regular desktop environment. Long as you can get Solaris to configure its network interface with DHCP after your Ubuntu is configured, you should be able to share to as many clients as you'd like. Fedora also works well for that, and in my opinion, it's a better Linux than Ubuntu, though Solaris remains a better Linux than Linux, right? Har.

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