Hi Mike
If your laptop came with wireless networking it will already contain encryption software, you just have to set it up, use WPA if possible, if not use at least 128bit WEP.
When you buy a wireless network card or dongle for your other computer, it will also come with encryption software, so you can just set it up.
If someone hacks into an insecure wireless network, and uses it for criminal intent then depending what country you live in, you could be held responsible, you will have to check your local regulations.
If you have Windows XP SP2 then you can use the inbuilt Wireless Networking Wizard to set it up, otherwise use the software that came with your wireless hardware.
Unless you want to be able to access the Internet from any computer, without having to have another one on, then you will not need a router with modem built in, or connected to it. So just set up the encryption and enjoy yourself.
Hope this helps.

Bill