I got it to work with PC only through proxifier.
Setting firefox or IE with manual proxy does not work, any ideas?
I have no prob with proxifier.
For those looking for instructions on setting up a adhoc network and connecting both iphone and PC together (XP):
go to to network connections
right click on wireless network connection
click on wireless networks
click on advanced
select computer to computer ad hoc
clear automatically connect to non-preferred networks
click wireless networks
click on add
choose a network name (iphone for example)
choose WEP enabled
uncheck the key is provided for me automatically
enter a network key thats 5 letters ex. iphon
click on OK
Go to general
under TCP/IP
set your PC for static:
"use the following IP address

IP address: 192.168.1.20
subnet: 255.255.255.0
gateway: 192.168.1.1
click on OK, and OK.
then go to your iphone
on the iphone, go to settings, wifi, choose a network and you should see iphone now
click on connect, type in your WEP password
once connected to the iphone ad hoc network, hit the right arrow on the network to specify static ip:
enter 192.168.1.21 as the IP address
subnet 255.255.255.0
and back to wifi networks, it will referesh with this ip now.
download proxifier
open it, click on options, settings, add:
hostname: 192.168.1.21
port 1080
SOCKS5
click on OK, OK.
Thats it!
Start your browser and it should work.