Best results for ICS are usually accomplished by starting with a clean slate (sharing disabled), then running the XP Network Setup Wizard on the PC with the physical Internet connection (in your case, modem).
- The wizard will prompt you for a connection method; you want to choose "this computer connects directly to the Internet."
- You will then be given a list of network interfaces to choose which interface leads to the Internet; choose your Internet dial-up connection.
- The wizard will offer to automatically choose the right connection to share, or let you choose one. Here, you will choose your Bluetooth adapter.
- The wizard will then create a "network bridge" between your dial-up and Bluetooth connections, and attempt to share that bridge with other users in your Windows workgroup or domain.
- Finally, the wizard will offer to write a configuration file that you can use on other Windows PCs in your workgroup.
On the dial-up connection's "Advanced" properties page, make sure that "Establish a dial-up connection whenever a computer on my network attempts to access the Internet" is checked. If that is disabled, other PCs will only be able to reach the Internet when the dial-up connection is ALREADY up and running.
Also, make sure that both Bluetooth adapters do NOT have personal firewalls (Windows Internet Connection Firewall or other) turned on, or configure firewalls to allow NetBIOS between your PCs. Finally, make sure that both Bluetooth connection properties pages have check marks next to "Client for Microsoft Networks" and "File and Printer Sharing for Microsoft Networks."
Here are some resources that you can consult for further information:
- Description of Internet Connection Sharing in Windows XP
- Resources for Troubleshooting ICS in Windows XP
- Enabling Internet Connection Sharing On-Demand Dialing
- PracticallyNetworked's ICS Tutorials Page
One final suggestion: If your PCs have built-in Ethernet cards, try using a cross-over Cat5 cable to connect them, get ICS working first, then move to Bluetooth. This approach may not prove necessary, but it completely eliminates wireless as a source of trouble.