yea, honestly do your plan of relocating the router and getting a wifi card for your comp. You can get linksys for about 15 bucks, and don't buy into the bs highspeed models... they'll more than likely use up a ton of your CPU and make your computer slow and your connection unreliable. you can get them at gearsx or something like that
http://www.pricewatch.com/networking/3552-1.htm
I think in order to do what you want to do the xbox would have to run something similiar to wingate which allows one comp to link up to another computer and use it as a gate way. I used to do that for a while before I got broadband since you couldn't get two comps on 56ghey.