What is the difference between 2 nics setup (one to ADSL modem and other to local network) or 1 nic setup (one to ADSL > modem over PPP and gateway at the same time for connection sharing) from security standpoint ?

Rob, it is always better to have physical interfaces, not only for performance, it is easier to configure and if your setup is not perfect, the "whole" may not compromise both sides. With 2 NICs, no one from the inside LAN can reach your Modem, because there is no physical connection. Modems often can be reached via http/telnet from inside. Thorsten