Are you running any other firewall, other than XPs one ? Most of the time problems like these relate to a firewall blocking network traffic.
And easy way to see if traffic is blocked is to use a ping command. To do this open a command prompt from Accessories and type "ping PC1" where 'PC1' is the name that you gave the other machine. The ping command will then send 4 packets of data and return the results of whether they were recieved or the sending timed out.