Now, I figure this must have been how it was set up before so I plug it back in to the Linksys. This is where it got weird! I didn't take much notice when I un-plugged from the router but the Nanostation was plugged in to one of the LAN ports. Then there was another patch lead that went from a LAN port to the WAN port. Thought this was real strange! When I plug in to the spare LAN I don't get an address from anywhere and even hard coding my laptop I can't access the router on any 'standard' IP addresses.
Now the customer was more worried about using the net than their phone. So I just plugged the PC directly in to the Nanostation and was good as gold. Also I didn't have any of their VoIP details so needed to find them out anyway.
But here is my thinking as to why the 'loop' lead was there. If the router had NAT & DHCP disabled. And then was set to 'Obtain an IP automatically' on the WAN side would the three LAN ports act as a switch and then the loop would feed an IP address to WAN side which would allow the built in ATA to work. Does that sound like it would work?
At the end of the day I don't think this is a very elegant solution. What I am thinking is if I put the Nanostation in to 'Bridge' mode I can just set the Linksys router to do the normal routing and make it establish the PPPoE session. How does that sound to people?