Something has to be working, if I go to either the Client or Host Network Connections - Local area connection 2 properties - advanced - settings, there is a list, on mine they are all unticked, the funny thing is if I tick for example the bottom item
Web Server(HTTP) then ok the other PC reflects the change also, so the PC's are talking to each other.
Another thing I noted on the Host is that the ICS is set on Local area connection 2 - the USB router, I tried changing to the Local area connection 1 - the ethernet card, and the clients Local area connection 2
dissapears, obviously doesn't like it!!

Well there goes another 4 hours, still no good!