Your friend's suggestion is exactly right and for the most part you're on the right track about what to do.
Connect the ADSL to the Linksys router. Since it's only a 4 port, you'll also need to daisy chain the router to a hub or switch. Use yourrouters uplink port or the appropriate crossover cable so they recognize each other correctly. You'll configure the router to use NAT/IP Masquerading and set the private interface to be your default gateway on your PCs. I know it sounds tricky, but it's really a piece of cake...especially with the Linksys routers. They are very nice and extremely easy to configure.
Here are a few websites that should be helpful references to you:
http://www.practicallynetworked.com/sharing/
http://www.linksys.com/tech_helper/intro.html
http://www.dslreports.com/pictures
http://www.speedguide.net/reviews/linksys/index.shtml
There are a lot of good links on some of these pages as well...that will provide help later troubleshooting, performance testing, etc. The Linksys specific link will assist you in setting up the Router.
If you have any problems or run into a snag, don't hesitate to let us know. You'll be surprised how easy it is though.
Good luck!!! Hope this helps...