Wifi tether (either the CodeGoogle app or the native tethering) does not work on the latest several Cyanogen nightlies. My computer does not see the Hotspot, or when it does it will show "limited" connection with no Internet availability.
It works fine with older Cyanogen builds. Is this a known problem with the newest nightlies?
CM team moved the wifi modules to a different folder. therefore none of the custom kernels work with the newer cm9 roms. I believe that the trinity kernel is currently the only custom kernel supporting it. Otherwise you will have to use the stock kernel or wait for the kernel devs fix the issue
Then again, if this is the case your wifi shouldn't be working either.
There is a thread on xda explaining this and directions on how to fix.