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IP issue using Internet Connection Sharing (ICS)

I have configured a Win2000 Professional system as an Internet Connection Sharing (ICS) host and have a Win98 PC trying to share the connection. Both PCs are set up to use DHCP and can see each other's resources OK, but the Win98 machine can't access the Internet. They are getting IP addresses of 169.254.x.x. (I understood that they should be getting 192.168.x.x?) When I run winipcfg on the Win98 computer, there is no gateway and no DNS settings. I have a firewall on the host PC, but have set this up to allow the client PC to access. Any ideas on how to get this working please?
It sounds like ICS isn't configured correctly. If the Win98 system has ICS configured, its LAN IP address should always be 192.168.1.1. Try disabling and re-enabling ICS -- it should warn you that it?s going to statically configure the IP address to 192.168.1.1. Then, reboot the Windows 2000 system and make sure it gets a 192.168.1.x address.

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