The 169.254.x.x IP addresses in the VM's are Microsoft self assigned addresses. These addresses are assigned if the network adapter is configured to receive it's IP settings automatically (through DHCP), but does not get one.
To me this looks like you are connecting to your ISP through a modem and initiate the session from the host. In this case NAT may be your only option, unless your ISP grants you multiple IP addresses (for host and guests).
André