First, why not connect the lappy to the router directly? (You can find USB wireless devices for Windows that run fine and cost almost literally pennies.) Second, how can you tell it's sending packets-can you explain in detail? Third, what IP is the Windows laptop getting?
I think "third" is why you can't get it to connect; it's likely on a different subnet from your Mac-which is normal when you share an Internet connection through a Mac.
Get us some answers, and we'll get you some fixes.