Problem using iMac as wireless router

I just read about using the iMac as a wireless router. When I set this up and tried it with my daughter's Macbook, and then with my MBP, both laptops detected the signal but both displayed "connection timeout" after entering the password.

I set up the wireless via Sys. Pref>internet & wireless>sharing>ethernet to airport. Are there some advanced settings I need to tweak?

Thanks, that's the exact article I used to set things up. It's just the problem with the Airport enabled laptops getting on using the iMac's signal.

I was puttering around trying to figure out the problem when I ran across this under Sys. Pref>Internet & Wireless>Network>Aiport

"AirPort has the self-assigned IP address 169.254.158.234 and will not be able to connect to the Internet."

Could this be part of the reason the laptops are able to "see" the network, but receiving a connection timeout after entering the password?

OKAY! Finally got it to work and it seems to work quite well. Now I can throw away yet another piece of "equipment" (the old wireless router) for an even cleaner desk.

I'm not super sure what I did because I did a few different things. Tweaks, mostly. I changed the password to exactly 13 characters. I got on the MBP and went to internet&wireless>network to put in the password for the new network expecting a timeout but it connected! Same thing on my daughters 13".

I'm not sure how to tell what the speed is via ethernet on the iMac (probably simple but I'm computer savvy enough only to operate and troubleshoot on a basic level, not detailed) but the connection has been stable with the laptops so far. Time will tell.