ICS Via proxy/satellite not working?

Last night I tried to help someone set up something - basically they have a
Windows ME PC, some XP laptops, an access point, a modem and a satellite
connection.

I got the XP machines talking to the access point OK, and I could also then
share their dialup on the ME box and the laptops could get online via this
connection quite happily. Then we tried to setup the one way satellite....
now, I've not used one of these before, but it seems like basically you set
up proxy servers in your IE settings and this lets it know to get stuff back
via the Sat. Once we "dialled up" the satellite connection (it basically
connects the ISP dialup then logs itself in) nothing worked. If I turned off
ICS though, it all worked OK, I could browse and download files without
problem. Re-activate ICS, and it all stops working again.

So, the only thing I could think of is that ICS can't cope with proxy'd
settings (it is set to go through port 8080)? I'm sure that can't be the
case, but I don't see any options to configure to change the way it
behaves... any ideas (besides replacing ME, although that is on the cards
soon anyway!)

Ta,
James