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Ok first things first. Did you remember to turn off Simple file sharing on the XP? Once you turn off simple file sharing, right click on your "share" folder and make sure that you start by sharing everyone. You can always remove it after you make sure that both computers can see the shared folder.
Again, if this is your first experience on using network shares. I would recommend that you dont do anything on your system drive. or desktop .. try creating sharing a folder that is not nested within your Documents and Settings or your Windows directories.
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