Excellent!!!! You asked if I had any firewall settings applied to either
computer - i've got (or I should say I had) the personal firewall of Norton
Internet Security running on both computers. Having disabled this on both
machines and setting the ip address to automatically be assigned DHCP works
perfectly assining comp 2 an ip of 192.168.0.2 automatically!
(The 127.0.0.1 you suggested also worked once the firewalls were disabled!)
Couple of quick q's:
Are there any settings that I should now change on my firewall to allow me
to enable it in future yet still share the internet but keep the firewall?
The connection does not appear in "network connections" on the client
computer although having used IE I am sure the connection works and is being
shared. Is there any way I can make it appear?
Many thanks for solving the problem!!!