Um, no. The IP range 169.254.*.* are link-local addresses:
Quote:
In IPv4[1], they are normally only used to assign IP addresses to network interfaces when no external, stateful mechanism of address configuration exists, such as the Dynamic Host Configuration Protocol (DHCP) or when another primary configuration method has failed.
http://en.wikipedia.org/wiki/Link-local_addressIn other words, your ethernet adapter get such an address because it failed to retrieve an address assigned by the router via DHCP.
What happens if you set up a static IP (in the same subnet as the router), default gateway and DNS servers on your computer?