Can you help me correctly set up this Macbook to use as a wireless router for my Wii?

I’m at my mom’s house for Christmas and she doesn’t have cable or a very large selection of movies, I brought my Wii so we could watch some stuff on Netflix Instant.

Turns out her router broke, and she’s waiting for a new one which she neglected to tell me. I’m not a Mac user, and I’ve done my best googling how to get this done but for some reason it isn’t working. So, I turn to Fluther!

INFO:
This laptop is running Mac OS X Version 10.5.8
I’ve turned on Internet Sharing (Ethernet shared to Airport)

I’ve even tried testing it on my iPhone – I can see the network, it asks for the password I set but it only ever says 3G.

Can this laptop just not do what I’m asking?
Have I missed something obvious?