I'd be a little bit wary of assuming a crossover cable to the desktop would allow the laptop to connect to the Internet via the (USB?) connection from the PC to the ADSL modem.
Keef,
Don't worry, it works! Use Internet Connection Sharing (ICS). The fact that the PC and laptop are connected together via x-over is not relevant. As far as their ethernet Network cards are concerned, they have valid IP addresses, subnet masks and default gateways. And electrically, there is a path between them - as 42psi says, the x-over cable provides TX-RX.
The only thing you can't do is use DHCP for IP addressing - and that includes passing DNS server details. So the laptop will need to have IP address, subnet mask, default gateway and DNS server IP addresses manually configured.
SD