Network and Sharing Center shows three networks instead of two.

Hi I have a client connected to the Internet via a dial-up connection which
is shared using ICS. This client is connected to a Belkin wireless router
through my wired LAN connection. The router has been configured to act simply
as an access point with its routing and firewall functions disabled. I have
two laptops and an Xbox 360 connected to the network wirelessly and all three
can access the internet without a problem. The only trouble is on the client
that is connected to the internet there are three networks showing up. The
dial-up connection shows up fine but the LAN is duplicated with one network
being unidentified and one being identified. When I click on view status on
either network the same Local Area Connection status dialog opens. Both
networks run off the same network adapter. Every time I reconnect or restart
the computer I have to manually change the unidentified network to private so
my Xbox 360 can access my media.

I have the IP address of the main client that is sharing the internet set to
192.168.0.1 on the LAN and the wireless access point is set to 192.168.0.254.
If I set the default gateway as 192.168.0.254 then two networks show up (1
identified 1 not). If i leave the default gateway blank then it shows a
single unidentified network. I have ipv6 disabled on the LAN.

Any help on this issue would be great. I am thinking I may have to set
static IP's on all clients and leave the default gateway on the main client
to 192.168.0.254?