Me and a friend are connecting locally same router. ONLY ONE can be on at a time?
 

So basically if one of us is in the world or character select screen.. and the other tries to get on (seperate account mind you).. as soon as they try to get in they are disconnected...

I was in the game piddling around and he tried to get on.. said disconnected as soon as he hit enter world...

Once I logged out he could get in.. then I couldn't

Any ideas on how to fix?

Post on the 1999 forums requesting access for more than 1 account for your IP, assuming that is the server you are attempting to play on. That is the only one I am aware of off-hand that IP limits to 1 currently. Maybe the new VZ/TZ does too. Either way, that would be something to request to the admin of that particular server you are wanting to play on, not here.