One thing I've found that seems to make networking between Windows XP computers a lot smoother, is to install the "NWLink IPX/SPX/NetBIOS Compatible Transport Protocol". It's supposed to be a protocol to support Novell Netware-based networks, but for some reason it makes basic home networking work much better.
To do this, go to "Network Connections", right-click on your LAN connection and select "Properties". Then, click the "Install" button, and find "NWLink IPX/SPX/NetBIOS Compatible Transport Protocol" under "Protocols".
You will also need to make sure that there is a directory that is shared on the network; you can do this in the folder/directory properties. It will not allow you to share directories that are within your "account", but you can use the "Shared Documents" folder, or another folder on the root or your hard drive.
