How to share an internet connection? (Peer to Peer Network)

How should I create a network, so that I could share my internet with another computer using Wi-fi. Is there any way to make it password protected. I am using Windows XP.

Solution 1:

For sharing an internet connection between two computers running Windows XP, you should use Internet Connection Sharing. Have a look at this Microsoft article for a step-by-step process of how to set things up.
You'll need a network set up that connects the computers that you want to share an Internet connection between. The Microsoft article uses "Local Area Connection" in its example (LAN), but you should be able to use "Wireless Connection" just as easily. And as far as making things password protected goes, the simplest thing to do would be to secure your wireless network.
Internet Connection Sharing aside, if you have a broadband connection, it would be a lot simpler to just purchase a Wireless Router. This would allow you to host a wireless network, share an internet connection between any number of computers that are connected, and use a wide range of security settings for "password protection."

Solution 2:

The solution to your problem is setting up an adhoc network

You could set up an ad-hoc network between the two pc's for internet sharing. Please refer to this post for details.

Use WEP to password protect your network, its an inbuilt windows utility