Please make sure you first have bonded or paired your device with your laptop.
Please keep in mind that the following you have to do, EVERY time you want to connect to the internet with your laptop. There are no tricks known to us to make this easier or faster.
To fire up internet connection sharing, you start with selecting "Internet Sharing" from your program files.

After you have opened Internet Connection Sharing, you can start by selecting the correct communication medium (you need "Bluetooth PAN") and the correct network connection.

You can basically select any kind of network connection you wish to share. This can be any internet connection (for example a GPRS connection).
After selecting the appropriate way of connecting and service, you can press the left softkey marked "connect" to activate the service.
Comments
Don't have internet sharing?
Thanks, and I'm glad I found this site.
Paul
Re: Don't have internet sharing?
I think the Ipaq is a Windows Mobile 5 AKU 2 device. The 2 after the build number (i.e. 2.6.0) indicates this. Could you check if the "old way" works for you?
Jaap