Internet sharing over wireless

Didn't see anyone post this but is anyone else having problems with Internet Sharing over wireless?
Trying to have the macbook connect to the iMac over wireless and use the iMac's wired internet connection. On the iMac, the Airport card is on, and in network preferences, internet sharing is turned on. However, the options for sharing over wireless is grayed out and I can't get into those options to customize it. On the macbook, it doesn't see it in the available networks list to connect.
Am I missing something? Do I need to "create a network" on the imac now? I didn't have to do this in 10.4.10

After much consternation and countless trials I finally have everything back up and working. Here is what I did finally to get it to work. (Note that I am not a network configuration expert - I am only reporting exactly how I have it configured and it works without complaint).
1. I trashed my \Library\Preferences\System Preferences folder and restarted my Mac since I had updated from 10.4 and I wanted to start from a fresh set of preferences. ( I backed up that folder separately)
2. I opened the Network Preference pane and configured my Ethernet connection (connected to my external AirPort Express which I am using as a wireless router to my other computers) as follows:
-Configure: Using DHCP
-IP Address: 192.168.0.197
-Subnet Mask: 255.255.255.0
-Router: 192.168.0.1
DNS Server: 192.168.0.1 (grayed out and so I am not sure what this means)
I set these settings by clicking on the Advanced button.
Under the TCP/IP tab I had chosen:
- Configure IPv4: Using DHCP
(This set the IPv4 Address, Subnet mask and Router)
- Configure IPv6: Automatically
3. On the Sharing Preference pane, I configured the following:
-Share your connection from: Novatel Wireless EXPD (because I have a 3G wireless connection; otherwise I would have chosen the standard Internet connection)
-To computers using: "Ethernet"
And then I turned on the Internet Sharing Service and confirmed in the pop-up dialog that I wanted to share my Internet connection.
4. Using Airport Utility, I configured the Airport Express by first clicking the Internet button to show the Internet Connection page and set the following:
- Connect Using: Ethernet
- Configure IPv4: Manually
- IP Address: 192.168.0.179
- Subnet Mask: 255.255.255.0
- Router Address: 192.168.0.1
- DNS Server: 192.168.0.1
- Ethernet Wan Port: Automatic (Default)
- Connection Sharing: Off (Bridge)
I also configured my Base Station and Wireless with names and Passwords.
I then clicked Update in AirPort Utility and after it restarted everything magically worked!
I think that the problem lay with my original IPv4 settings where I had chosen DHCP rather than Manually hoping that everything would automatically be set as it had worked previously. The clue was that on my MacBook Pro I noticed that the DHCP was not enabled when connected to the AirPort Express. Even my iPod Touch is now connected to the Internet!
If anyone can explain all of this I would appreciate it.

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