Why won't ipod connect to internet?

Question

I got my ipod touch like about 3 weeks ago, and I've never been able to get it to connect to the wireless network in my house. I created an unsecured wireless network via ad hoc, and the ipod connects to the network perfectly. On the ipod, it shows that it has full bars, yet everytime I try to access safari, youtube, or any other application that requires internet, it either says that it can't access the server, or that it's not connected to internet.
I've 'forgotten' the network, reset the ipod touch twice, reset the modem, and now I really don't know what to do.
On the DHCp section, this is what appears on the ipod-
IP Address- 192.168.0.162
Subnet Mask- 255.255.255.0
Router- 192.168.0.1
DNS- 192.168.0.1
Search Domains- mshome.net
And these are the properties of the Network on my comp.
IP Address- 192.168.0.162
Subnet Mask- 255.255.255.0
Preferred DNS Server- 192.168.0.1
Is this out of the norm or something? What should I do to fix this problem? ... I could also still return the ipod since I only got it a couple weeks ago.

Answer 1

Now it is, b/c I just set the network to obtain an IP address and DNS Server automatically (which i guess somehow enabled DHCP), however, because of that, the network settings that had appeared on my ipod changed.
Now in the DHCP section it states -
IP Address- 169.254.137.115
Subnet Mask- 255.255.0.0
All the rest of the spaces are empty.
... And the internet still doesn't work.