No wireless internet when connecting 2 computers together

Here is my problem.
I am connecting wirelessly to my Uncles wireless internet, I have both a laptop and desktop computers, both connect fine.
What I am trying to do is us my linksys wrt54g v8 to connect my 2 computers together so I can access the hard-drives of both machines.
What happens is as soon as I plug into the linksys wrt54g v8 I lose connection to the internet, I am still connected to the wireless but it says "Local only" and I can not access anything on the net.
I have tried it both with the wireless part turned on and off, I want it off if possible.

What is my problem?

Thanks
Michael Grace