cbones,
I had a similar issue. To solve it, I manually entered in the following under my "remote-NDIS host" entry:
IP: 169.254.1.169 (in your case I would try to enter the IP address your PC is reporting, you mention 169.xxx, so put the full IP address into the remote-ndis host field)
subnet: 255.255.255.0
gateway: leave blank
then soft reset and give it a shot
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