This is just a post for reference in case anyone else runs into the problem:
Symptoms:
Android phone running 2.3.5, wireless or usb tethering connects to the computer but doesn’t connect to the net. As soon as you select tethering, the “3G” icon on the phone disappears. Turning tethering off causes it to reappear
Cure:
Add an APN. Thanks to this post I got the idea it might be APN related. Thanks to this post I got the correct details for the APN:
Create a New APN. Set the following (with capitals but no “”)
Name “Consumer Broadband”
APN “orangeinternet”
Username “Orange”
Password “Multimedia”
Authentication “CHAP”
APN TYPE “dun”
Then select this new APN and continue.
Marvellous – thanks, Internet.