Is it possible that you are trying to push your ethernet connection to AirPort instead of Wi-Fi? I share my Wi-Fi connection through my ethernet, and Internet Sharing left settings as AirPort -> Ethernet, but now in Lion it has to be Wi-Fi -> Ethernet for my settings.
You would have opposite settings.
I had the same problem and found that I had to set up the security password again in system preferences/sharing. Click on Wi-Fi options at the bottom of the Sharing preferences and select the level of security you want. Then enter your password and click OK. You might find that you will have to re-enter the password on your iPad/iPhone even if it is the same one that you used previously.
7/21/11 5:32:11.000 PM kernel: Ethernet [nvenet]: Link up on en0, 100-Megabit, Full-duplex, Symmetric flow-control, Debug [796d,0000,0de1,0005,45e1,0000] 7/21/11 5:32:11.000 PM kernel: 05f5e100 00500026 NVEthernet::setLinkStatus - Active 7/21/11 5:32:12.600 PM ntpd: bind(33) AF_INET6 fe80::223:dfff:fe9d:6656%4#123 flags 0x11 failed: Can't assign requested address 7/21/11 5:32:12.600 PM ntpd: unable to create socket on en0 (12) for fe80::223:dfff:fe9d:6656#123 7/21/11 5:32:26.582 PM UserEventAgent: ServermgrdRegistration cannot load config data 7/21/11 5:32:26.582 PM UserEventAgent: ServermgrdRegistration oldConfig is nil during net changed notification
I can't seem to get internet sharing to work in Lion. If anyone knows of a fix or any official info re internet sharing in 10.7, please post. Many thanks, k/x
in Lion, use simple computer name. i.e: MBA, instead of Somebody's Macbook air. It worked for me