on the MS social forum has provided the answer. The situation is more complex than I had understood, and is not just a matter of setting permissions. The bottom line appears to be that if you want to network a mix of XP and Win7/Vista PCs then you should play by the rules. To share full drives, set up matching usernames and passwords, and don't try to share root drives. Or use the Public folder for transfers, which is what I will do. Registry hacks are not going to do it in general.
Windows 7 Can't Access Shared MacBook
Malkeleah-what do you mean by "matching user accounts"?
and related posts.