The 169.... IP address shows that there is no DHCP address server in your system - these are addresses windows defaults to when all else fails.
Have you run the network wizard on your ME pc (on ME it may be called Internet Connection Sharing Wizard)?
Run it on the ME pc, stating that you want to use this as a gateway to the internet. If it asks which port to use it on, choose the broadband connection (the USB port?) Follow the instructions. You can either prepare a diskette if offered, or run the Network Setup Wizard on the laptop and tell it that you are connecting through another computer on the network.
When you have finished, the IP address of the wireless adapter on the ME pc will be 192.168.0.1 and that of the laptop 192.168.0.2