So if I got that package would connect it to desktop and configure following the insturctions and then do the same to laptop and then it is ready to go?
Yes, but you don't need to physically connect the router to the laptop at any time.
Would I need to keep the BT modem for the configuration or not?
No
Do both computers need network cards?
No - in your case the router would be wired to the network socket in your PC - the USB adaptor does the same job as a network card in your laptop.
I want the network to be wireless - I thought the router transmits and then network card in laptop receives the signal?
It will be, and it does.
Would the desktop have to be connected to the internet for the laptop to be able to connect?
No. It wouldn't even have to be switched on.
Also, would instant messenging programs such as MSN work between the network?
Yes, using two different accounts.