1. connect host laptop to previously created 
   sharing network

2. go to network sharing centre and click manage
   network connections

3. right click wireless network connection and go to 
properties

4. double click internet protocol version 4 (TCP/IPv4)

5. click use the following ip address and create address

6. click use the following DNS server and leave blank

7. click ok and connect ipod to the shared network

8. touch > on ipod and ip address should be DHCP

9. an ip address and subnet mask will come up eventually
   router, DNS and others can be blank

10. under HTTP Proxy choose manual

11. open up ccproxy on laptop, ensure its started and click
   options

12. beside local ip address click auto detect and the #
    should be the same as the # in internet protocol version 4
    in the wireless network connection.

13. when the number comes up in box select the box on right
   and deselect auto detect box

14. on ipod touch enter the # under manual as server and port
   # in ccproxy (808) enter as port # under server on ipod touch

15. you should now be connected to the internet

In a nutshell
1. connect pc to network
2. connect ipod to network
3. open/start ccproxy

thanks to derron.