The Windows "direct cable connect" is regular PPP except that the strings CLIENTCLIENT, CLIENTSERVER are exchanged before the PPP handshaking will begin.
I got internet access via serial using Genesis and win2k, so it is possible. I set up static IPs and ran a proxy server on the PC. Otherwise Windows didn't want to share the internet connection over serial, as it seemed to ASSume that the serial connection WAS the internet connection. Maybe XP/Vista are different though, I don't know.
