LordSnailz, your diagram sounds right if I read you right:
CPU 1 needs both a HomePNA card and an Ethernet card. CPU 2 and 3 need just the HomePNA card. So you'll need 3 HomePNA cards for 3 computers. (The kit only has two.)
Cable modem --> CPU 1 --> phone jack ----//----> phone jack --> CPU 2
(CPU 3 would work the same way as CPU 2.)
The only problem is CPU 1 has to be on all the time with Internet Connection Sharing on, for CPU 2 and CPU 3 to use the internet.
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What I do is a bit different though.
DSL modem --> Ethernet router --> Ethernet to HomePNA bridge --> phone jack --> computer
In this setup, none of the computers need Ethernet, and none of the computers has to be on all the time. However, my setup is considerably more expensive, since both the router and the bridge are about $150 each. (The router is a 10/100 Ethernet, and the bridge is 10 Mbps HomePNA.)