Well that diagram is misleading i tells ya
seriously tho,
If you cant lay ethernet which will always be safer for security and always a little faster because of the nature of wires vs wireless in your current location, I would buy a wireless router and 3 wireless cards which in england would be very cheap and affordable solution.
I currently use a netgear router which isnt the porsche 911 of routers but it does the trick.
Sharing from PC2 to your linux box can be done a few ways
Windows internet sharing is not my cup of tea, and it can appear confusing for first time networkers, so draw on a diagram your lans layout and details.
http://www.practicallynetworked.com/sharing/xp_ics/
there are third party software solutions but i wont advertise any since only a few worked well without crashing in the taskbar by breathing on them incorrectly.
As stated before your linux machine would serve you a lot better as the server to your homes network traffic and save you bandwidth by caching common sites as well as acting as a firewall.
