OK, I have it figured out..

This link xda-developers - View Single Post - Internet Sharing over WiFi - WMWifiRouter v0.89 (Jan 7, 200 has a different version if getting ICS installed. Rather then having an installer, it has manual edits for the registry.

I compared the settings to the settings done from the installer linked above, and I noticed a few missing items.

I added them, and then tried to use ICS (via USB cable). It started to work, but kept connecting and disconnecting every few seconds.

I recalled that somewhere in the XDA thread it was mentioned that you can't do data on the phone at the same time. I turned off Wireless Sync and the connection stayed up. I was then able to succesfully use WMWiFiRouter and am posting using it now.

The specific missing registry items are:

HKLM\Comm\Tcpip\Parms\IpInitializeRouter 00000001 REG_DWORD

HKLM\Software\Microsoft\Shell\Rai\:MSINTERNET_SHARING\3 00000000 REG_DWORD

HKLM\Software\Microsoft\Shell\Rai\:MSINTERNET_SHARING\2 00000001 REG_DWORD

HKLM\Software\Microsoft\Shell\Rai\:MSINTERNET_SHARING\1 IntShrUI.exe REG_SZ

HKLM\Software\Microsoft\Shell\Rai\:MSINTERNET_SHARING\0 MSINTERNET_SHARING REG_SZ

Also, one of these two had the wrong value (can't remember which one now)

HKLM\Comm\ConnectionSharing\PublicInterface 1 REG_SZ

HKLM\Comm\ConnectionSharing\PrivateInterface 0 REG_SZ

Alan