Wifi tethering unavailable HTC Magic
I only tinkered with it a little, but I'm pretty sure that you can only create a WiFi tether with an Android 2.2.x device if the manufacturer allows for it or if you root your phone and install something like Barnacle.

I found this thread over at Android Forums in which the first reply specifies that the Magic doesn't support WiFi tether.

If you can handle having a USB cable connected between your laptop and phone PdaNet seems to work well for people without root.