First of all- thanks for all of the help. It would be much easier for people to read the posts and move on without giving it a second thought. The fact that help is given without expectations is much appreciated. I would like to think that I give back by updating the wiki and trying the hardware that I have, but there are certainly those that give a whole lot more.
I will certainly switch the cables and though the admin pages swap the interfaces to see if that changes things. It seems odd to me that the core receives the DNS's from the WRT54G but does not get the gateway ip address. Which leads to 3 questions:
1) I don't mean to argue, but wouldn't it be easier to diagnose the NIC problems when it is setup as it is? In a 'passive mode' if you will where all it needs to do is receive an ip address from the network rather than having the core be the DHCP server on that nic? My knowledge of these things is very limited.
2) Is it necessary for eth0 to be the external and eth1 be the internal? Does LMCE only act as a DHCP server on eth0? If so, that would explain my initial findings where the DHCP server seemed to be passing ip address up the external network to my WRT54G and onto my GF's computer.
3) How do you know if your nic is supported? I was reading this: http://wiki.linuxmce.org/index.php/Unrecognized_NIC
but as that it is the core and not a MD, I don't know if it will PXE boot. What makes me believe that it works is: it can read the MAC address, and receives the DNS information from the router. What makes me believe it doesn't work is that it doesn't receive an ip address from the router. I have mac address filtering on, but I think that only applies to the wireless network. I will add this mac address to the allowed list just to be sure.