cookiebun,
"This is an issue MS has with every OS they release, it doesn't play nicely with the older OS"
this is blatantly untrue!--I have been using windows since vers 3.1 and have never had 'sharing' problems with newer OSs--not even with MAC OSs
Snip.
Lucky you. I been dealing with this issue since Windows 95. I've lost countless hours of productivity dealing with this issue at home and at work since the mid 1990s every time MS releases a new OS. Maybe I should just switch to a Mac.
IF your Windows 7 machine is requesting a password when you try to access a shared folder on your XP machine (and the XP machine has no password) then perhaps the 'sharing' setting on the XP folder is incorrect, the folder you're tying to access is incorrect, or the sharing on the XP machine needs to be turned off and then back on.
Snip.
Tried that. Didn't help. I never get as far a a shared folder, It won't let me look at anything on the machine.

snip
furthermore--both machines need to be in the same 'workgroup' (not 'homegroup' as that only applys to Windows 7).
I think this is the issue though how this got changed since I first set up the network is a mystery to me.
snip
one more thing--if it's taking a long time to copy files to a USB stick on the Windows 7 machine--try another USB port--as it appears you have a hardware issue with the Windows 7 machine.