Have you tried this:
Open the Control Panel - Network and Sharing Centre.
Over on the left, click "Change Advanced sharing settings"
Choose "Home or work"
Work through the options, giving the appropriate permissions.
I would suggest, for the test, you turn off the password option.
I have a fairly open Lan system around the house. One of the computers is using XP. These are my settings. - I'm assuming you have sett up the common workgroup?