I do not have IP's overlapping or double assigned.Just a sanity check -
The furthest I've gotten is to get the windows box assigned an IP (10.0.0.210), but can't ping the internet or the IP address on the Linux box. I can ping from the Linux box to the windows box ok.
If you can't ping linux from windows perhaps you are dropping ping packets? is eth1 trusted so to speak.e.g. allowing all traffic from inside?
I tried to save the tcpdump and the ethereal but it doesn't look like text so I'm unable to post that. But I can tell you that it says that yahoo.com com along with my ISP's DNS can't be reached.
I have found that if I stop iptables to bring down any firewall issues, then bring it up again, the dhcp server on the Linux box assigns eth0, (which is supposed to get an IP address in the range of 192.168.x.x from the Cayman) 10.0.0.209
That all just works here - make sure your outer linux interface is good to go, has an ip address and can get to the internet before moving on to dhcp and nat for the boxes inside -
Joe