It can be a daunting task to Setup a home network, because the default network configuration requires that a DCHP server is present on the network. Sometimes the ISP router/modem can act as DHCP server and provide the proper network configuration, but if this isn't the case then all computers end up with 0.0.0.0 / 0.0.0.0 as IP address and cannot connect to anything on the network.

This is where Automatic Private IP Addressing (APIPA) steps in and tries to save the day, it continues to chooses a random IP address within the range 169.254.x.x / 255.255.0.0 until it finds a unique IP that doesn't conflict with other computers IP. When a computer is configured with APIPA, then it can only connect to other computers that are also configured with APIPA.

Note a computer only attempts to use APIPA when configured to use a DHCP server and it doesn't respond (timeouts). When assigned an IP from APIPA, then the computer will continue to search for a DHCP server, by sending out a DHCP request every 5 minutes.

To configure the use of APIPA in Windows 98/Me:

[HKEY_LOCAL_MACHINE \System \CurrentControlSet \Services \VxD \DHCP]
IPAutoconfigurationEnabled = 1 (Default = 1)

Note to see if using APIPA then start WinIpCfg.exe and check that the IP address begins with 169.254.x.x

To configure the use of APIPA in Windows 2000/XP:

[HKEY_LOCAL_MACHINE \SYSTEM \CurrentControlSet \Services \Tcpip \Parameters]
IPAutoconfigurationEnabled = 1 (Default = 1)

Note to see if using APIPA then start a command prompt (cmd) and run this command "ipconfig /all", and check that the IP address begins with 169.254.x.x

Related Faster boot times by using static IP instead of DHCP

More Info MS KB188480
More Info MS KB220874
More Info MS KB255836
More Info MS KB244268