Please help with WRT54G2!!

Question

I bought this wireless router to enjoy wireless internet and home network. It created more problems with setup I ever could imagine. Now I am totally lost and don't know what to do.
In brief, the router works. But so strangely I can't even understand what is happening and it works in a weird way.
I have a small home network with a desktop running XP and a pair of notebooks.
External WAN connection (internet) is provided by PPPOE provider.
When I connect the desktop directly  to the WAN connection and use XP for PPPOE there is instant connection and no problems at all. The desktop has automatic IP number and gets an IP number assigned by the provider. 
Problems start when I link the desktop with WAN connection through the WRT54G2.
First, it will not connect to PPPOE EVER. It just gives errors or just disconnects after some time.
The firmware is latest, 1.0.4 as I have a model revision 1. The desktop has automatic IP assigning, so it gets a new IP from the router. I can connect to router through admin utility and try connecting from there, but its usually fruitless. 
Second,  weird thing is that if I leave router at disconnected mode, but will dial from desktop's XP utility, it will connect normally though the router and internet will work. Wireless will work if the PPPOE connection in desktop is shared.
However, this connection is unstable, wireless will not work and it requires desktop to dial the PPPOE connection.
I can't work it in a normal way. It creates me headaches trying to adjust all those things and its not working normally. I tried everything but to no avail.
Please help!! 

Answer 1

Who is the service provider?
Are you using a broad band modem from the provider and if so what kind?
Have you checked with your service provider to ensure you've configured the router per their router setup? In other words, is the PPPOE done via the router or via the service provider's modem?
I use a WRT54G2 with AT&T DSL service which has PPPOE. However in my case the modem provided by AT&T handles the PPPOE connection and I simply set the Internet Setup Type on the Basic Setup page for the router to "Automatic Configuration DHCP" and then hit the "Save Settings" button and its off to the Internet.
If you need to add the PPPOE information to the router try changing the Internet Setup Type on the Basic Setup page to PPPOE, then fill in the User Name, Password and if needed Service Name fields. Some PPPOE user names need to have the full account (so it looks like an email address), others don't. After entering the information hit the Save Settings button and then check the Status page to see if the PPPOE connection is active in the Internet section.
One other thing to try if all else fails, if you have the DHCP server active on the Basic Setup page, try changing the Local IP Address just above it to something like 192.168.2.1. I ran into a strange issue with my G2 router where it would not connect to the Internet when I initially set it up. Drove me crazy for hours. Turns out the service provider's modem was handing out 192.168.1.1 to the router for the router's wan port IP address and as such conflicted with the Local IP Address's that where handed out via router's DHCP server to the wireless connected computers and to any computer connected to one of the four local switched ports.
Message Edited by bennor on 11-30-2009 01:35 PM
Message Edited by bennor on 11-30-2009 01:36 PM