Disaster!!! Tethered iphone internet sharing over wifi router. HELP!!

Ive made a few posts but they keep changing everyday because i learn something new that needs to be changed... so here it goes ill try and make this as clear as possible.

here are my settings (all DHCP):

Tethered Iphone
Iphones IP - 169.254.xxx.188
subnet mask 255.255.255.0
DNS - is blank

Airport TCIP settings (ad-hoc network that i created im assuming)
IP: 169.254.xxx.189
subnet: 255.255.255.0
router: 169.254.xxx.188 (same as iphone so i can see its working as a router)
DNS - is empty

I then shared internet connection between the airport ad-hoc connection and build-in-ethernet. firewall is off, windows websharing is on.

A d-link router is hooked up from my laptop. Theoretically if my internet sharing is configured correctly I should be taking the internet im getting on my computer-to-computer ad-hoc network and sharing it over the router wirelessly.

Built-in-Ethernet TCIP settings
IP: 192.168.0.170 (assume its automatically assigned by router?)
subnet: 255.255.255.0
router: 192.168.0.1 (routers IP i use to get to router settings)
DNS: is empty


I want to know two things...

1.what is my DNS? should it be blank? is it automatic? i dont know what its for.
2. and how do i correctly share internet over this wifi router? because both my xbox live (microsoft) and other lap top (windows) are giving me DNS issues.

i wanna rip my hair out.

Hi,
I don't think you've given us all the information about your network.
The normal function of AIRPORT CARD:
System preferences -> Network -> Airport:
TCP/IP Tab:
Configure IPv4: Using PPP
IP Address: 222.68.136.151
Subnet Mask: (Blank)
Router
: 24.24.24.24
DNS Servers: (Blank)
Search Domains: (Blank)

__________________
Router Passwords

What I did to get tethering working with ICS

I have an EVO 4g, tethered to my Power Mac G5 using easy tether. I have a D-link wireless router connected to the mac via ethernet cable on port 1 on the LAN side of the router. I connected wirelessly to the router, input the ip address of the router with my web browser & connected. I disabled DHCP under network settings & then clicked on the ADVANCED tab. Under the advanced tab there were many options "virtual server, port forwarding, website filter etc..." I clicked on the Advanced Network tab, scrolled down to Enable Multicast Streams, clicked the checkbox (to enable), saved settings and rebooted the router. Viola!! It worked! I'm sharing internet connection through my mac from a tethered android to a wireless router & connecting my Win XP to the wireless network & watching X-Files. Different routers may be different, but it works with a D-Link N300