I'm looking for ethernet 0, heard he is a regular.

Ethernet0 is the feed into the hub on your router. Its the layer-3 side of all the ports of the hub. Ie. every port on them is part of Ethernet0.

so how do I have ethernet1 pass my incoming internet traffic through ethernet0 and out through the other ports?

Ethernet1?

You don't have a 2514 which had two ethernet ports, you should only have Ethernet0 and no other layer-3 router ports.

Do you mean the first hub port?

You can't do a router-on-a-stick with a hub. Sounds like you have the wrong box for the job for what you describe you are trying to do.

I jumped into a pool with the wrong life jacket. Wonderful. What device would you recommend for the job?

So, it sounds like you want a cisco router that has two ethernet interfaces and does something? What kind of speeds are we talking? What kind of something should the router do in the middle?

Your 2507 was designed 10 years ago for a T1 (maybe two) for a small-office and the hub on the back was to save having a seperate ethernet hub to hook some workstations up to that T1.

T1 speed is 1.5Mbps. Times two port is 3Mbps. Thats the kind of speed any 2500 is going to handle. What kind of speed are you looking for?

What you are looking for is going to influence what to recommend grately.

I am currently subscribing to DSL that is 3mbps down and 512kbps up. I need something that will do NAT, Packet Filter (possibly firewall) and web proxy --is that available for a budget?

A Cisco 2621 is pretty cheap and would work for what you need.