XP Infrastructure wired/wireless setup problems

What IP(s) were those? Do you mean IP(s) staring with 169.

You're not using the protection of the router to protect your machines on the LAN. The machines should be setting behind the router on the LAN with DHCP on the router enabled so that it acts as a router providing the protection to the LAN from the Internet. The NAT router provides the ICS. You enable File and Print Sharing on the O/S(s) so that that they can share resources like the printer on one machine, while they are behind the router.

ICS on the XP O/S with wireless is suspect to say the least about it and you should avoid it.

Here is the proper use of a NAT router.

You should use the full protection the router has to offer for the wireless to prevent the wireless side of the network from being hacked with someone being all over the top of your machine hacking them as they join your wireless network. . You should use something like Wallwatcher to watch connections to and from the router for dubious connections.