well i said not to use NAT, but either way will work. in your scenario the point of failure will be the return traffic from the adsl router. that router sits on one network and so can directly route traffic that sits within it's locally connected subnet. however it doesn't know how to reach the network on the other side of your linux router. so the traffic goes from the client, to the linux router, to the adls router, to the net. the reponse comes from the net, to the router and then chokes. by natting you make the client address become the address of the linux router which is on the same subnet as the adsl router, so the router can respond back fine. as above, a better solution would be to simply tell the adsl router that the client network lives via the linux router. then you don't need to nat and have a more visibile and clearer network.

How do I do that? I have already added a static route to the ADSL routers routing table and it seems to work for local connections but not connections through the defaukt gateway.

My ADSL Routers Routing Table is as follows with the static route highlighted:
10.0.0.2 is the address of the Linux Router.

sorry, yes so it is... so what happens if you ping a 10.10.0.0 address from the adsl router (looks like a linux based adsl router there ... busybox?)? I would think that if you're now masquarading on the linux router, you won't be able to reach them.