<<< However when I ask laptop to set up a connection it only shows the ethernet as being the option it wants to use to connect to a network. >>>
That sounds as though you are trying to set up "Internet Connection Sharing". As the Wireless adapter is your internet connection, the only other available adapter to connect to a network is ethernet. However, you *SHOULD NOT* be setting up Internet Connection Sharing.
Forget wizards. Make sure both computers are in the same Workgroup, set at least one folder as "shared" in each computer by right clicking and selecting the Sharing & Security option and ensure any firewall software is configured to allow access to the networked computers. You should then see the shared folders in the remote PC when you go into My Network Places.