<<<< OK, I'm running a cable modem that has two connections, one RJ45 that runs to the internet and one marked 'Ethernet' that I've connected to a wireless router.>>>>
If you are running a *CABLE MODEM* (as in Virgin Media, formerly NTL/Telewest) then it has an ETHERNET port and a USB port. You can use either to connect with a computer, but not both simultaneously. The actual internet connection is via the coaxial cable that comes in from the street.
To connect a router to the Cable Modem, power everything off, including the Cable Modem which must be left without power for three or four minutes - this is IMPORTANT so that it loses the association between the existing connection (recognised by its MAC address) and the IP address that it has allocated to it.
Connect a network cable between the router's WAN port and the Cable Modem's Ethernet port. Connect a second network cable between the PC's network port and one of the Router's LAN ports. Power on the Cable Modem and, when fully booted with all lights displayed, power on the Router. When the router is fully up and running, boot the PC. The Cable Modem will recognise a new connection and allocate a different IP address to it.
If you now type the Router's IP address into your web browser you should be able to open its configuration pages to set it up for wireless networking. You do not need to be connected to the internet to access the router's configuration pages from your web browser.
As far as connecting to the ISP is concerned, "Cable" uses the very basic setting to connect and get its addresses by DHCP. It doesn't use PPPoE and you don't enter a Username/Password. The actual description varies from router to router so if you need further help with this setting, post back with the router's options.
<<<< I seem to be able to connect both laptops to the LAN but only one of them can access the internet. >>>>
Only one computer can get online because the router isn't connected correctly. Instead of allocating LAN IP addresses to the computers, it is passing the WAN IP address to one computer and only that one will get online.
<<<< internet connection sharing is enabled on both >>>>
Internet Connection Sharing *MUST NOT* be enabled on any connection in any of the networked computers when using a router.