Ethernet option doesn't show up in internet sharing.

Do you have something connected to the Ethernet port other than the computer you are trying to share with? Are you getting internet on the iBook wirelessly?

Is the Xbox what you want to share the internet connection?

Internet sharing is between the Airport port and the Ethernet port. You are not using the Airport port, rather you are using a USB wireless device. I suspect that's why you cannot share the connection.

You are using a Verizon EVDO wireless device to obtain a wireless connection via cell service. I doubt you can share that internet connection on your computer.

In that case the setup I see is that need to click on the Internet Sharing entry in the Sharing list. Then select Airport from the drop down menu (or whatever port your Verizon device uses,) then check the box for the Ethernet port to which you will share the connection.

Obviously your USB modem must already be configured and functioning.

Sorry, then, I don't know how to help you.

I am guessing that because you are using a USB internet connection, that Sharing thinks you are getting your internet via your ethernet device, so it does not include that device in the list.

My Verizon DSL modem comes with an ethernet port (It might have USB, but I ignore that). I then have that ethernet port plugged into a home WiFi base station which then redistributes my internet connection to all the other systems in my home.

If you have an ethernet option from your Verizon provided broadband modem, then the simple and robust solution is to get an inexpensive home WiFi base station and use that as your home router for your Mac as well as your Xbox.

Now if you want to continue to play with using your Mac as a router, then start with System Preferences -> Network, and see if you have a "Built-in Ethernet"?

Does the fine print under the "Built-in Ethernet" say "Inactive"? If it does then this port has been explicitly disabled. Use the little Gear icon at the bottom of that column and select "Make Service Active".

If you have a "Built-in Ethernet" and it is NOT "Inactive", then you could try duplicating it via the Gear icon at the bottom of the column. Maybe that will give you an Ethernet sharing option.

But again, your life would be so much easier if you put a home router between you and your Verizon internet connection. Besides a home router is also a hardware firewall that does not allow internet bad guys into your home network.

When turning your Mac into a router, the down stream side becomes its own subnet 10.0.1.* subnet, with the Mac router owning 10.0.1.1.

The Xbox should be given a 10.0.1.* address via the DHCP server that System Preferences -> Sharing -> Internet Sharing should enable.

The Xbox traffic should be routed to your Verizon internet connection via the NAT server that Internet Sharing should enable.

I do not think you should need to give the ethernet an IP address. That should be handled automatically. I am more concerned that Internet Sharing does not give you the option of selecting Ethernet as the "To computers using:" port.

And again, I still think you would be better served going to <http://dealmac.com> and finding an inexpensive Cable/DSL router or WiFi base station to be your home router, and just attach the Xbox to the router.