FLC OF ACR MLG ACFT OVERSHOT CLB ALT DUE TO NOT RESETTING THE ALT PASSING FL180 RESULTING IN LTSS WITH ANOTHER ACFT.

Narrative

FLT LEG FROM ATL TO CHS. CRUISE ALT FL290. WX CLR; VISIBILITY UNLIMITED. DURING CLBOUT OF ATL; FLT ATTENDANTS NOTIFIED US OF A PAX SVC PROBLEM (NO WATER; THUS NO HOT BEVERAGE AVAILABLE) AND ASKED US TO MAKE A PA. THIS OCCURRED SIMULTANEOUSLY WITH AN ATC FREQ CHANGE AND ABOUT THE SAME TIME WE PASSED FL180. AS A RESULT OF THESE 2 EVENTS; BOTH PLTS MISSED RESETTING ALTIMETERS TO 29.92. ALTIMETERS WERE SET AT 30.45. ACFT ONLY AT CRUISE ALT ABOUT 10 MINS AND TALKED TO 2 JAX CTR SECTOR CTLRS. DURING DSCNT TO FL260; ZJX ASKED US TO RPT LEVEL AT FL260 BUT GAVE US NO ADDITIONAL INFO. AT ABOUT FL264 I SAW AN MLT ACFT AT OUR 11:30 POS; APCHING AND PASSING BENEATH US AND ABOUT 1/2 MI TO OUR L. AT LEVEL OFF; ZJX QUESTIONED OUR ALTIMETER SETTING. WE IMMEDIATELY RESET BOTH ALTIMETERS TO 29.92 AND CORRECTED THE ACFT CRUISE ALT BY ABOUT 300-400 FT. WHILE ACKNOWLEDGING THE CAUSE OF OUR REDUCED VERT SEPARATION WITH THE MLT WAS OUR INCORRECTLY SET ALTIMETERS; WE BOTH DISCUSSED THE CTR'S LACK OF CALLING THE TFC TO OUR ATTN AND NOT QUESTIONING OUR ALTIMETER SETTING AT CRUISE ALT; EVEN THOUGH WE EVIDENTLY PASSED THROUGH 2 SECTORS. SUPPLEMENTAL INFO FROM ACN 225722: ON THE CLBOUT; BOTH PLTS WERE DISTRACTED BY A PAX PROBLEM AND RADIO CALLS AND NEGLECTED TO PERFORM OUR CLB CHKS. OUR ALTIMETERS REMAINED AT 30.45.