Well at last I have managed to solve one of my problems of sharing the internet. I am now writing my experience for those who might stumble upon similar problem.
1. For those who want to use static IPs on a two computer network- e.g. 192.168.0.1 and 192.168.0.2, there is only one place to setup a gateway and that is on 192.168.0.2 where it names 192.168.0.1 as a gateway (presuming one is using 192.168.0.1 as the computer to connect to the net)
2. In case one is using GPRS connection one has to configure Iptables configuration using ppp0 (instead of eth0 as given in the following link) a very good and simple example for iptables can be found here
3. last but not the least is that unless the nameservers in your /etc/resolv.conf are same as the computer which connects to the internet you will not be able to open the web pages but would be able to ping the websites
4. one more step I copied which is supposed to have NAT running at boot is in the /etc/sysctl.conf
where I changed
Thanks to the forum archives and all the linux Forums where I had posted this problem and found guidance.
PS: I also avoided Network manager as I have read a lot about it being buggy