The 1394 connection is your firewire port. Firewire ports can be used as network adapters, but is very seldom used.
When you enable ICS, the network adapter connected to the local area network is assigned a static IP address of 192.168.0.1. It sounds like your connection to the Intenet is already using 192.168.0.1 as the gateway, causing a conflict.
Open up the Network Connections applet in the control panel, find the network adapter that is connected to the Internet, and double-click it. Select the "support" tab and note the IP address for the default gateway. If it is 192.168.0.1, you will need to change the IP address of the router that is serving you the Internet. If you can not change the IP address, then you will need to use a more configurable Internet connection sharing solution such as NAT32.
The problem is, these software solutions will cost the same as a hardware wireless router, so you may be better off going that route. If you decide to use NAT32, instructions for setup are here.