Apple Remote issue..

I've searched everywhere with no help regarding my issue. My setup is as follows:
iPhone 3gs
Windows XP
Router configuration:
Internet goes into a 4 port dlink wired router with the IP address rage of 192.168.0.xxx
Dlink router plugged into 4 port router with the IP address range of 172.198.0.xxx
Computer is wirelessly connected
iPhone is wirelessly connected

Problem:
Whenever I have Home Sharing enabled with the iPhone app, it searches for devices, finds my network and tries to connect. After 10 seconds it disables my wifi and says no local network found. It then pops up the wifi connect window and it prompts me to re-enter my wifi password. Which, while the app is open, states that it's incorrect.
As soon as the app is closed, I am able to re-connect to the network.
Any insight would be greatly appreciated guys and gals! I'm completely stumped here.

Well it seems to be the wireless router that was the issue. As soon as the app was open, I was unable to ping (for exp. google.com) from my pc. I did a firmware upgrade on the router, and re-configured everything and it just started working.
No more crappy dlink routers for me. If only linksys had the option to plug in external antennas I would have never have stopped using them.