I have two macbooks in my home one is connected to internet via an Ethernet cable and I want the second one to connect to internet through the first using wireless...is that even possible?Any help would be appreciated...
Mac OS X includes a neglected feature called Internet Sharing in the Sharing Preference Pane to do just what you'd like to do.
You can turn this on by going to the Sharing Preference Pane in System Preferences, saying what connection you want to share and to what other device and check off "Internet Sharing". For wireless you can put a WEP (hence my saying neglected before) password on the wireless network. If you're having issues connecting to the internet with the second computer, make sure you have an IP address that doesn't start with 169.254.x.x and the first Mac's firewall will permit connections. I wouldn't recommend this as a long term solution however.
Screenshots to help out:
If for some reason DHCP is not working correctly (I found it quite flakey with 10.5 but works fine with 10.6) you can force it to work. At this point I find it's definitely going past the point where the effort expended would most likely be put into better use getting a router or something similar to fix the problem in a more scalable manner.
The screenshots are from Mac OS X 10.6 so the GUI will look slightly different for the different versions of Mac OS X but you want to enter the same numbers into the IP Address, Subnet Mask, Gateway and DNS fields.