Hi Alan,
I’ve got a similar setup to yours. From my experience, Fog does require an internet connection during the install.
I left my network adapter on DHCP and connected to the Internet during the install part of Fog. Just configure the installation as you’d like. For the standalone, you’d need to setup Fog to be the DHCP server and pick an IP for Fog. I think any class C will work, I used 192.168.1.1
After the installation is complete, disconnect the Fog server from your network, change the network adapter to static and use 192.168.1.1 (or whatever you’ve selected). Now, when booting the Fog server, you’ll need to have the network adapter connected to another device, either a hub, switch, router, or another network adapter. Otherwise, the DHCP server service starts and quits immediately. Even then, I sometimes have to manually start the DHCP server. For Ubuntu 9.04, I think you want
sudo service dhcp3-server start
to start the service from a command line. You can substitute “status” for “start” to see if the DHCP service is running or not.
Hope this gets you going. Let us know how it goes!