Hi,
yes, you should enable internet connection sharing on the laptop. I thought you only needed ftp transfer between the laptop and the xbox. I hadn't noticed the need for intenet connectivity.
I have never done such connection myself. According to a tutorial I read on the Internet, The Local IP adresses are all in the range 192.168.0.XXX. The difference with your setup is the third number which should be 0 instead of 1. Your pc should have the IP adress 192.168.0.1. In your xbox network setup, you should give that number as gateway and also as DNS server. Give the xbox the ip adress 192.168.0.254.
According to the tutorial, you can use DHCP. (The xbox setting obtain a ip adress automatically). The PC will give DHCP clients the adresses starting from 192.168.0.2 and going up. You are not sure with this method that your xbox will always have the same IP adress. If you ftp to the Ip adress, you might need to change that every time. For that reason, I would give it a static IP adress.
regards.