Can't share my Internet connection - Can't create Wifi network

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Hi!
I'm struggling to get my Mac Mini A1176 with 10.7 to create a Wifi hotspot. When I try, either through Internet Sharing or by manually choosing create network, it says "can't connect", and fails to create the hotspot.
The only strange thing I can find, is that when I get the screen where I can choose network name, channel and security, channel is blank. I can't choose channel, the only option is the sign: -
Anyone else seen this? Doesn't the A1176 support Adhoc networks?
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I never had to create an adhoc network.
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