Okay, first, do NOT install IPX/SPX or any other protocols. The default TCP/IP connection is all you need and want. Your router should be assigning your machines their IP addresses and putting them into the same subnet automatically; you generally don't need to worry about that.
Next, for convinence, make sure both PCs are in the same workgroup. Right-click My Computer, go to Properties, and Network. Make sure both have the same name.
Now, on the XP machine, you may have the firewall enabled, which will prevent any machine from connecting to it. You'll want to turn it off for the time being (when you update XP to Service Pack 2, you'll have better control over the firewall, and can reenable it then). Go to Control Panel, Network Connections, right click on Local Area Network, and go to the Advanced tab and uncheck the firewall.
Then, you need to enable the Guest account on the machine that you're sharing. Control Panel, User Accounts.
Next, choose a folder to share, right click, Sharing, give it a name, and add "Guests" to the user list. You can choose Read Only or Make Changes/Full Control. If you are not running "Simple File Sharing" on XP, you'll also need to go to Security and grant rights to the Guests account group. No need if Simple File Sharing is enabled.
Okay, so now you should be able to go to the other machine and see your shared folder.
-Troy