Hmmm, OK. Then something is a bit wonky with how you're setting it up. What version of Mac OS are you using?
I've successfully shared internet through AirPort on my PowerBook from an external USB WiFi card, so we should be able to make this work.
EDIT: Assuming it's 10.6 as in your sig, here's a quick run-through of the steps:
- Go to System Preferences
- Go to Sharing
- Click on Internet Sharing, and turn it off if it's on
- Make sure the "Share From" menu has selected Ethernet, and the ethernet is plugged in
- Check the AirPort box
- Under AirPort Options, make sure encryption is disabled (it's actually a good idea to have it on, but until we get it working you want to make sure that we know what exactly is causing the issue)
- Click the check box next to Internet Sharing on the left.
You should be good to go at this point. Let us know what happens.