Windows 7: Win 7 & Win XP file sharing problem

I have problem sharing files between Win 7 build 7600 wireless laptop and Windows XP Media Center Version 2002 Service Pack 3 wired desktop.
So far I have gone over numerous tutorials and threads on the internet and this forum as well and nothing works for me.
I can see the Win 7 laptop on my XP desktop but when I double click on it I get the "\\Laptop is not accessible. You might not have permission to use this network resource. Contact the administrator of this server to find out if you have access permissions. The network path was not found".
On the Win 7 laptop I don't see the XP desktop in "Network" but when I look in "Network Map" under the "Network and Sharing Center" it does show up there.
I can also ping from Win 7 to XP and vice versa and it is working fine.
The advanced sharing settings on win 7 are as follows in 'Home or Work' (my win 7 is set up for Work Network):
- Turn on network discovery
- Turn on file and printer sharing
- Turn on sharing so anyone with network access can read and write files in the Public folders
- Media Streaming ON
- Enable file sharing for devices that use 40- and 56-bit encryption
- Turn off password protected sharing
- Allow windows to manage homegroup connections (recommended)

I have also disabled Homegroup so it does not show at all in "My Computer"

On the XP desktop I have disabled "simple file sharing"

I am a bit burned out after couple of weeks of trying to make it work, especially that I am new to Windows 7.

Can anyone give me some thought of what I should try next to get it to work?
Eventually I would also like to share printer which is also connected to the XP desktop but first I would like to get the file sharing to work.

Thanks.