OK this may help in figuring out what is going on...
I tried to ping my PC name. It was not able to.
I then pinged the IP of the XP machine instead on the PC name... That worked fine.
Now this is interesting...
I THEN RE-tried to ping the PC name of the XP machine and after the first ping using the IP the PC name was pinged! So in other words the windows 7 machine did NOT recognized the XP's PC name until it was pinged by it's correct IP address.
Next I was curious so I went to network in explorer and Nothing had changed. It only showed the local windows 7 machine. So I decided to manually enter my pc name in the address bar example "//PC
Name". Now... the PC name appeared in the network list. I clicked it and was able to see my shares on the XP machine. Now... I closed explorer, went back to network and BOOM... NO XP MACHINE!!! In otherwords it had no memory of that pc on the network. So I am seeing that is not able to find the XP machine manually.