This was actually INSANELY easy to do with vista on the laptop. This tutorial is for Vista on laptop and XP on desktop.
:::SETUP FOR SHARING INTERNET:::
On laptop go to control panel, network and internet, network and sharing center...
Once here click "view status" next to your wireless connection..
Under Activities, click properties...
Then click on the second tab "sharing"
Click the first option "Allow other network users to connect through this computer's internet connection"
It should be set up to share internet with whatever device is on the network with the laptop.
Now you just have to network your other pc with the laptop. You might be super lucky and plug in a ethernet cable from your laptop to your desktop and it will find everything and work off the bat... but probably not.
You will probably get the little yellow triangle that says limited connection. If that happens you need to force your computers IP number.
This is pretty easy once you have done it a few times. (if youve been to a lan event of course you know this)
:::FORCE LAN IP:::
On XP just go to Start, connect to, show all connections.
Here you should find a "local area connection"
Right click on it and click properties...
click on Internet protocol (TCP/IP) and then click properties...
click on the second tab Alternate configuration...
Click the radio button User configured...
Then for IP address put in 220.127.116.11
and for Subnet mask put in 255.255.255.0
then click ok...
You have to do this on the other computer as well... its basically the same on vista you just have to click on "view status" of the local connection rather than the wireless and click on properties. Then continue from "click on Internet protocol (TCP/IP) and then click properties..." but make sure you make your ip address to 18.104.22.168.
On the second computer use any other number in the IP address other that what you used on the first one.
So if your first desktop is 22.214.171.124, make your laptop 126.96.36.199 or 188.8.131.52 etc, the subnet mask should be the same though.
After you do this on both computers they should reconnect just fine (without the limited connection problem).
Then it should work.... if not you will have to refresh your ip. You can do this either by restarting your pc (long way) or by going to command prompt and refreshing your ip. You should only have to do this for your desktop.
In XP go to start, run, and type in cmd and hit ok...
then type ipconfig /release
wait for a second then type...
wait for about a minute and you should be good.
It should refresh with mshome and then 3 numbers below it, after that you should be good and have internet on your desktop through the wireless on the laptop.
I was able to play some online games with friends on my powerhouse desktop on my HDTV last night without having to drag out a 40ft cable to the living room =)
After you are done having fun you should put your ip back to "Automatic private ip address" in the Alternate configuration of the internet protocol settings. (both computers)