Why is Windows Internet Connection Sharing not working?

[Richard]

I assume that the laptop connects to the Internet through the wireless adapter.

I am not sure about setting up ICS in Windows 7. I have done it only in XP. However, I am confused about why the wireless network connection properties from one of your screen shots shows the home network on wireless network connection 2. I would expect this to show an Ethernet port as your home network. In XP you have to enable ICS on the adapter that connects through to the Internet, and tell that adapter which is the other adapter that will be connecting to the the computers that are to share the Internet connection.

In XP, the network connection that is connecting to your other computers is automatically set up on sub-net 192.168.0.0. I suspect that Windows 7 might do the same thing. This means that if the wireless network that connects the laptop to the Internet is on the same sub-net address, then ICS will not work. You need the network that connects to the Internet to be on a different sub-net.

Also, if you are using a Cat5 cable that connects the Ethernet port on the laptop to the Ethernet port on the desktop, then this may need to be a cross-over cable otherwise this might be a further obstacle to a successful connection.