when you want to share your connection, go to the System Preferences and open Sharing. In the right-most tab (Internet), you can hit the Start button and it should work.
this is assuming that in the Network panel of System Preferences, your modem is listed above your Built-in Ethernet in the "Network Port Configurations" (accessible from the menu preceeded by the word "Show:").
you'll have to hit that button after each shutdown/restart of the imac.
your ibook will have to be set to use built-in ethernet for it's connection (in the tcp/ip control panel) and to use DHCP to obtain an address (your imac will be the dhcp server once you hit that button).