I see this often when drivers for the motherboard or network controllers are updated from Windows Update.
Your post is far too lightwieght in the area of hardware and driver selections.
This is a real head scratcher. ICS Internet Connection Sharing just stoped working properly in winxp professional sp1 on Powerspec 1.6ghz pent4 256mb ram 60gb hdd, and 800mhz generic clone pc 480mb ram 120 gb hdd. No changes were made to the system configuration. It was working one day asigning addresses in the proper range of 192.x.x.x. Next day ranges were in the 169.x.x.x and I was unable to access the internet. Manually assigning addresses only allowed access to other pc's on the network. But not the internet. No problem was found with the nic cards or any other hardware. Tried everything known including swapping cards and changing slots. Nothing worked. Another tech suggested I might have a corrupt winxp file. Only solution: reinstall winxp which worked to allow access to the internet but all application links were broken. Pain in the butt reinstalling all software apps. This happened multiple time on same pc's. Reinstalled windows multiple times now I have multiple bootup choices. The windows versions that work and the ones that don't. Can I fix the ones that don't work because there are irreplacible applications installed that I do not have the CD's to reinstall from. To summerize: The DHCP server is not assigning usable IP addresses in the 192.x.x.x range. This whole problem started after I had trouble with my Linksys router and needed to give my three network pc's access to the internet. I set up ICS and everything worked fine for awhile. Then one day out of the clear blue my system refused to see the internet. I rebooted and it was no good from then on.