Thanks for the replies.
Been doing some more googling this morning and found this on another forum which seems to back up TOG's second theory..
I did it!!!!
Okay I finialy connected to Xbox live. Here is what you have to do:
1. BRIDGE your the wireless internet connection and your local area connection that your xbox is hooked up to. (this means you will have to turn off Internet connection sharing for the connection that is connected to the internet)
2. Obvioulsly make sure that all connections are set to obtain IP's and DNS automaticly.
3. Foreward the following ports on your wireless router.
UDP 88
UDP 3074
TCP 3074
And after I did all those things, the xbox just connected to xbox live. I think the problem we ran into was we were trying to set up ICS to make the connection work, when all we needed to do was turn off ICS and bridge the connections. Let me know if this did not work for you cause the was some other settings I messesd with that I am not sure if you need to do or not.
Now I can have a go at that tonight, but as I don't have a router (so I cannot do item 3) will it be possible?
Thanks again.. this is tying me up!