ICS and XP Pro problems

I have a network at home with a host machine running winXP Pro. My second mahine was running win98. We have had ICS (Internet Connection Sharing) running on the host machine and everything has been working fine. We can see each other, share files and share the internet connection through an internal ADSL modem on the host machine.

Here is our setup:

My PC (Win 98) ----> Switch -----> My Son's PC (Win XP) ----> Internet (ADSL)

We both have brand new NIC cards (3Com). Problem is when I upgrade my PC to XP which was built from scratch we can't see each other and I can't access the Internet from my son's PC (The host).

I have removed all protocols but TCP/IP. We have both manunally configured static ip adresses with the host machine on 192.168.0.1 and my pc on 192.168.0.2 with both having the subnet mask 255.255.255.0 both are the same workgroup. This doesn't work.

We've also run Windows "Set up a home or small office network" Wizard several times and what happens is the host machine is manually configured with the appropriate IP address (192.168...) etc. but wizard configures my PC as DHCP and assigns it an ip address in the 169 range and of course that doesn't work. If I then again manually configure my PC with a 192 IP adress, it still doesn't work.

As I said before this is odd because it works fine when the host machine is running XP and my PC is running 98. The same switch is used, as well as the same cabling so it cannot be those. The only difference is my PC is running XP instead of 98.

If I smash the 98 image on the second machine everything is back to normal, we can see eachother and I can access the internet through his machine.

Has anyone run into similar problems?

Thanks