How about something like this?
config t
int fa 0/0
ip address <your_ext_IP> <your_ext_mask>
exit
int fa 0/1
ip address <your_int_IP> <your_int_mask>
exit
ip route 0.0.0.0 0.0.0.0 <your_GW> perm
wr mem
exit
Internal hosts have to be configured to point at the router and with the correct IP / subnet mask.
Proxy? That's easy... squid... build it on your favorite linux distro, BSD, or Commercial UNIX. Download it from sourceforge, make sure you've got gcc and all installed, then tar -xvf, ./configure <options>, make, make install. Then just set it up how you want in /etc/squid/squid.conf (might be somewhere else depending on your install options).
Good luck with the homework!