I have a network that is connected to the internet via a switch connected to a router. I have it setup like this so I can work on the new network without causing problems on the old.

Anyway, I'm trying to enable internet connection sharing. Internet comes to server like this:

Modem -> Router -> Switch -> Ubuntu 11.10 (Eth0)

I want to share the connection through Eth1 (Eth1 -> Managed Switch -> Clients). Here is my config for /etc/network/interfaces:

I have a DHCP server running on Eth1. Here is my config:

ddns-update-style none;

option domain-name "myserver.local";
option domain-name-servers 192.168.1.2, 8.8.8.8;
default-lease-time 600;
max-lease-time 7200;

authoritative;

subnet 192.168.1.0 netmask 255.255.255.0 {
  interface eth1;
  range 192.168.1.3 192.168.1.254;
  option routers 192.168.1.1;
  option subnet-mask 255.255.255.0;
  option broadcast-address 192.168.1.255;
}

Here is /etc/network/interfaces:

# The loopback network interface
auto lo
iface lo inet loopback

# The primary network interface
auto eth0
iface eth0 inet dhcp

#Used for internal network
auto eth1
iface eth1 inet static
  address 192.168.1.2
  netmask 255.255.255.0
  broadcast 192.168.1.255
  network 192.168.1.0

Here is /etc/hosts:

127.0.0.1       localhost
127.0.1.1       myserver.isp.com     server
192.168.1.2     server.myserver.local server myserver.local

In /etc/sysctl.conf, I've set the following:

net.ipv4.ip_forward=1

Finally, in /etc/rc.local, I've set the following:

/sbin/iptables -P FORWARD ACCEPT
/sbin/iptables --table nat -A POSTROUTING -o eth1 -j MASQUERADE

When I ping 8.8.8.8 (google's DNS) from a client that is authenticated with my DHCP server (they have been assigned a local ip, like 192.168.1.10), I get a timeout.

How can I debug this further to figure out where my problem is?