Several of my Macs (actually, all of them) do this.  The problem is 
that when you set AppleTalk to ethernet, the software performs a link 
test.  If there is no response from a hub (or other device), AppleTalk 
switches back to its original setting.  This clearly presents a 
problem when trying to network w/ a Xover cable...

You can't choose AppleTalk over ethernet unless the machine at the far 
end of the cable is already set to use ethernet (and will report its 
presence when it recieves the link test), but the machine at the far 
end of the cable can't be set to ethernet until the machine at the 
near end of cable is set to ethernet...  And so on.

There are two solutions, though one of which is somewhat more reliable 
(that one first)...

* Connect one machine to a hub w/ a patch cable and turn on AppleTalk 
over ethernet.  Unplug the patch cable, plug in the Xover cable to 
both macs, and set the 2nd mac to ethernet.  Since the 1st already 
passed the link test, this works fine.  (Of course, if you have a hub, 
why are you bothering w/ the Xover cable...)

* Sit both Macs side-by-side.  Plug the Xover cable into both macs.  
Open each Mac's AppleTalk control panel.  Simultaneously select 
ethernet in both control panels.  This should give each Mac enough 
time to receive a link test from the other and tell them that there is 
an active ethernet network.
- This method *almost* always works for me, though sometimes it takes 
2 or 3 tries to get the timing down.

This question actually comes up pretty often.  The 2nd solution works 
for every mac I've ever used (though sometimes with difficulty).  
That's countless 68k machines, PB3400, PB5300 (w/ ethernet PDS card), 
PBG3, Beige G3, 9600, 9500, 8500, 73/6/500, 8100, 7100, 6100, etc...  
You get the picture.

Hope that helps,
Drew
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