You are correct... and welcome to the forum
The WAN port on the router connects directly to the modem, the LAN ports (normally 4 of them) is then available for you to plug in your PC/xbox/anything else
The power up sequence will be as follows, Modem, Router and then PC/xbox that way the correct IP's are issued.
The ONLY issue might be ports and greatly depends on what software you have running... Programs like P2P or even some games might need a port opening up, you'll soon find out and is a very easy fix..
One other bonus is that just about all routers now sold have wireless which means you can link in other things (like a laptop/ipod)..just remember to change the security setting to WPA2...probably best to ask more when you get the router
