Your settings for sharing the Wireless Connection do not look quite right.
1st step .. ALWAYS start with all security WEP etc. DISABLED. To establish the connection (you can add security later) you should first try without any encryption.
2nd .. Disable any Firewalls or security software on Vista and OSX.
3rd Start with a static IP scenario. Remember that the Mac will be acting as a type of DNS server which may not be to the liking of Vista. To begin with assign fixed IPs .. Using the same method as described here
http://www.macosxhints.com/article.php?story=200511191556062774th .. Assuming you get it running you can then try using dynamic IPs if you want, selectively re-enable the firewalls and finally adding encryption.