Linux based connection sharing

Linux has a very powerful IP stack built into the operating system. Linux itself has the capability of routing user LAN to the internet with NAT or Network Address Translation (explain NAT). In the Linux world this is often called IP Masquerading.

http://gallery.techarena.in/data/519/linux_router.png

one of the favorite way to use Linux as a router is with a micro-distribution. There are versions of Linux out there that run off of a single floppy disk. Using one of these distributions, you can convert an old, unused computer (even a 486!) into a capable broadband router. Since the software fits on a floppy, then user don’t even need a hard drive in the system! Most of the micro-distributions of Linux routers have minimum requirements of a 386 with 16Mb of memory.
Cyote Linux has a very cool installation and configuration method. Cyote Linux starts with a Windows program. Run it, and you can actually configure the router in Windows. Next, a program creates a bootable floppy disk that has your fully configured Linux broadband router!

To masquerade (internet connection sharing in Windows language ) on Linux with windows there are few lines of iptables and ip_forward commands.

First of all you have to flush and delete existing firewall rules.

So flush rules by typing in terminal:
iptables -F
iptables -t nat -F
iptables -t mangle -F

Now delete these following chains:
iptables -X
iptables -t nat -X
iptables -t mangle -X

It's Now time to save the iptables rules so type:
service iptables save
service iptables restart

Now all rules and chains have been cleared!
Check it in /etc/sysconfig/iptables which has all default rules set to accept.
Now open /etc/rc.d/rc.local and insert the line:
echo "1" > /proc/sys/net/ipv4/ip_forward

And then save and close the file.
Assuming that internet interface is eth0, type:
iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE
service iptables save
service iptables restart

Now the iptables will be set to start during boot up.