I have figured out another way to do direct connection, but it is a bit modified.
Here:
Connecting to XBox Live: Direct Connection w/o Router in Room
The setup of your network using this method should be similar to that illustrated by the below picture:
Requirements: modem connected to internet and router, Existing router and pc with wireless card network, ethernet cable, and xbox 360.
Follow the below steps to setup your network
1. Make sure your current router/receiver card setup is working, and you are connected to the internet on your desktop.
2.
Open Start Menu --> Control Panel ----> Network Connections
3. You should see something like you see below.
4. If local area connection is not enabled, enable it.
5. Click on wireless connection, and go to the General Tab. Highlight 'Internet Protocol TCP/IP' Click properties, and check the box that says 'Obtain IP Address automatically', same with Obtaining a DNS Server.
6. Then go to the Advanced tab. Check the box that says Allow other network users to share my internet connection, and uncheck the one below. Press ok. you should be prompted with something saying we will change the LAN Adapter, or your ethernet adapter's ip adress to 192.168.0.1, click ok.
7. Test the connection on your 360, if it works, play some xbox live.
For the following, if you dont know how to use ipnconfig, if so proceed to step 8.
(to find all these IP and DNS stuff out, go to Start Menu --> Run under 'Run' type in 'cmd' you should see command prompt open up. Once there, type in 'ipconfig /all' and you should see all the ip
s and gateways and dns servers your 2 adapters are using. ) Below is an example, dont worry its not mine so dont try to steal anything, you should see two headings Ethernet adapter 'Local Area Connection', and 'Wireless connection' with all the adresses underneath.
8. If it fails the DNS server test, go to your 360 under the the
system blade --> Network Settings --> Edit Settings. Set the Primary DNS server to the one of your receiver (wireless card) and ethernet network card
(they should be the same, meaning if its not by now, go to the general tab under conenction properties like seen in the picture above back in step 5, uncheck Obtain DNS Server automatically and match it to the DNS Server of your router if not done so.) make the secondary DNS server address to the IP of your ethernet network card just incase.
9. It should work after that. If it doesnt, make sure your internet is working on your desktop, then if not, there must be something wrong with your router. If its still not, PM me.
Ya so i wrote that up because it totally stressed me out doing it by myself, so if you guys think its ok keep it, if not delete it. Anyone feel free to pm any questions they had configuring this.
Uhm the downsides of this are that it makes your desktop internet slower, and you steal bandwidth from other clients on your network, but it is a very cheap way instead of wireless bridging and making proxy servers and all that stuff.