Sheesh there are some confusing instructions in here, let's go back to basics.
1) Unplug the ethernet cable from the modem
2) Unplug the modem, wait 30 seconds, then plug it back in
3) Do a hard reset on your router, then reconnect it to the modem using the WAN port on the router to the Ethernet port on the modem, you may need to refer to the manual for the router, but that's usually available online, also make a note of it's default LAN IP Range.
4) Connect one of the Laptops to the router using an Ethernet cable, not wifi
If your IP address is still a 169.254.xxx.xxx IP and not one within the default range of the router then try the following.
Open (XP) a command prompt, (Start, All Programs, Accessories, Command Prompt) or (Vista & 7) an Administrative Command Prompt. (Start, Programs, Accessories, RIGHT CLICK Command Prompt and 'Run as Administrator)
type in the following commands
netsh int reset all
netsh winsock reset
After the second command you will be told you need to reboot. Do so, then check your IP again. If it's still a 169.254 IP then we will try the following.
Change the IP to manual setup
IP Address - Something in the same net group as the router, I'll use 192.168.0.1 as the router's default IP in this example
IP 192.168.0.100 (Last 3 numbers must be different to the router's IP)
Subnet Mask 255.255.255.0 (for most common routers this is correct, it usually sets itself after you set the IP anyway)
Default Gateway 192.168.0.1 (Always the Router IP)
Then see if you are online, either way try opening a web browser connection to your router. http:// router IP address
Check the settings in the router are set to DHCP assigned WAN IP, DHCP allocation of LAN IPs and set up the SSID and WPA2 security on the wifi connection.
If the Router isn't getting online try opening
http://192.168.100.1 username and password are root. If you can get to the modem then it's progress and we'll work from there
Remember that when you want to plug something different into the modem you need to reboot it first or it won't work no matter what you do