169.254.x.x is windows fallback IP. It means your not getting and IP from the DHCP server. Naming your workgroup is all well and good, but until you get the connectivity issue resolved it won't make a difference. Try to manually assign your IP. Find out what your other PC's IP are. You can type ipconfig from a dos prompt to find out. You can also use ipconfig /all from a working box to find out what the router's IP is. It will be listed as the gateway. Use an IP in sequence with the others. So if your have 192.168.0.2, 192.168.0.3, etc... make the one your having trouble with 192.168.0.4. Once you do that you need to ping the localhost to see if TCP/IP is even working properly. From a dos prompt type ping 127.0.0.1. If that is successful then ping the IP of that PC. ping 192.168.0.X, where x is the last octet of the machine you just addressed. If those both work, ping the gateway. If it times out then you either have a physical issue, bad port on the switch or bad patch cable, or you have a possible firewall issue, or other software related item. Could be the NIC as well. You have to troubleshoot these things by process of elimination.
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Did you read his whole question? He wants to make the comps see each other on the network also, lol...not just get internet access.
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And you think he can't without changing the workgroup name? Like workgroup names only makes it easier to browse for remote shares, it's not a magic wand.