Of course the Modem goes into the Modem port and your main system connects to Ethernet port 1.
You might want to try unplug the Router and Modem for about 30 seconds, then plug in the Router only, wait until the status or a similar worded LED to start blinking and then plug in your Modem. I would give them a few moments to sync and then try to see if your computer can surf the internet.