While ago I blogged about Windows 7: Turn your Laptop as Wireless Router (Wi-Fi Hotspot) using netsh commands. Now I found there is a free software named Connectify does it for you in few easy clicks.
This is what the developer has to say about the software:
Connectify is an easy to use software router for Windows 7 computers. After downloading and installing the lightweight application, Connectify utilizes your computers’ built in Wi-Fi card to wirelessly share any available Internet connection: a cable modem, a cellular card, or even another Wi-Fi network. Other Wi-Fi enabled devices including laptops, smart phones, music players, and gaming systems can see and join your Connectify hotspot just like any other Wi-Fi access point and are kept safe and secure by password-protected WPA2 Encryption.
Download it here: Connectify