merging two network

may require more info but if you are using win xp or w2k go to network connections in control panel then right click the LAN you are using on the pc and select properties then go to the TCP/IP properties the go to Advanced under ip address address assign the pc an address in the additional range eg if pc currently 172.168.0.2 then add 192.168.0.3 or whatever

well my first question is how does the modem get its IP address?

Second is that a router routes traffic from 1 segment to another If a router received a packet it first determines if that packet is destined for the local network by looking up the destination address in the routing table. if the destination address is not on the local network, the router sends the packet to the default route out [ 0.0.0.0] OR the router just drops the packet. To send packets destined for another network, you can specify routes in the routing table so that the router knows where to send em.

More information is needed. The router's function in life to to deliver the packets to the correct network segment (VLAN) or another network altogther (ie. 172.16 to 192.168). What is your DSL modem hooked into to...a switch, one pc? What is behind your router (what kind of router)?

The simplest way is to add static routes in the routers configuration reference the two routing points. Give the interfaces on the router an ip address from each respective network and then set the gateway address of the pc to be that interface on the router.

if you're just creating a small network, why don't you just change your routers IP into 192 series? It will be much simpler that way, hence reducing the probability of more problems coming in.