The surfboard issues a single IP address to the device attached to its ethernet port - it registers a single MAC address only. To extend with a router you would need a router with an ethernet WAN port, which the 2Wire is not.
One option you have is to use Internet Connection Sharing with your PC. So leaving it configured as it is, with the LAN connected to the cable modem, and the wireless card connected to the wireless on the 2Wire (again, disable DHCP on this device).
Then on the PC, go to the properties of the LAN and enable internet connection sharing. This will change the IP address of the wireless card, and issue DHCP from it. Anything connecting to the 2Wire will get an IP address from your PC and connect via it to the internet.
You do this by going to
- Start / Search. Type "View Net" and select View Network Connections
- Right-click and select properties on the LAN connection
- Select the sharing tab, and enable Internet Connection Sharing, and select the wireless network card in the drop down