connecting two computers and internet connection

i have successfully connected my pc from my room with that of my daughters pc at the hall, just 10ft away using cat cables, and installing lan card

i am able to successfully access files across both systems, and transfer files too.

my TCP/IP config is also ok. but i am not able to connect to internet. My ISP has confirmed he is not blocking anything.

it was earlier working fine, and i used to experiement often changing IP addresses to learn.

now i have used IP addresses 192.168.1.1 /255.255.255.0 and
192.168.1.2 /255.255.255.0

where i have gone wrong?
my lan is working fine. only
internet connection is not clicking

my os is XP Pro with SP2 installed

pl.guide.