H jaus, not sure if you know, Network Discovery is only Windows 7 machines. The Network link in Explorer does not rely on Network Discovery. It is just a tool that locates what ever machine is on the immediate network. If you Xp machine is one the same Vlan as your Windows 7 (ie if both machines can ping one another), then it should be on the Network page. Sometime it may not come up straight away, it needs time.
The Network and sharing pages that chev65 has displayed , is not all for W7s explicitly, some of those options are just for networking basis. Eg if you want to share files from Windows 7 to XP, the File and printer sharing needs to be turned on.