I formatted and reinstalled Linux this morning, so as to remove the possibility I have accidently changed a file. Here is the result of changing my route table:

route -F add default gw

This is an autoconf IP address. It's assigned when windows doesn't have any other configuration for that network and can't find a DHCP server.

You still don't have ICS enabled properly if a 169.254.* address is coming up.  Given that your network card isn't

Have you followed the appropriate MS KB article for configuring ICS?  

I don't recall if you're using XP or a later version of windows, but here's aome XP links:


And here's another article:

They all document the same process, but you may find one more useful than the other. The last one, for example, includes some troubleshooting tips.