I've had my share of Windows ICS troubles...

This being the case, I am still a bit rusty on my rules for ICS. Isn't the host suppposed to be 192.168.0.1 anyway?? I don't quite follow where you are saying:

That action gets a window that states that the IP will be changed to 192.168.0.1.
My point is, shouldn't it already be 192.168.0.1?