if it failed to start, then its right, you need to enable the services it depends on.
Right click on my computer, go to manage, go to your services tab and find the services and enable them.
I would suggest that you've put the wrong primary dns in or that ICS is not enabled on your pc, and since you say you haven't turned it on, then that's what it is.
I loathe ICS, but i used it like 5 years ago before it became antequated.
Essentially what would happen if you didn't get that error is, plug your computer into your modem via usb. I assume your usb does not have a ip of its own.
On this pc, right click on the modem connection in network neighbourhood.
Click properties, click advanced, click allow other network users to connect through this computers internet connection.
You've now got ICS turned on. Turn off your firewall and restart your pc.
Now on your xbox, setup the ip as:
192.168.0.32
Default gateway -> 192.168.0.1
Edit: An ethernet port on your modem? Can't you just buy a hub and then link the modem to the hub, and then your pc and xbox to the hub?
edit: well probably not, but since hubs cost like 1p off of ebay. I'd just get a router if i were you