New
#11
Thank you for the comments and suggestions and yes I do understand there are security risks when you don't use a password and/or give a guest account full access - but it's good you point that out for others who are reading this.
I managed to get it working but I'm not quite sure what happened.
First, and probably most importantly, I went back to the Network and Sharing Center -> Change Advanced Sharing Settings and this time noticed the scroll bar. Scrolling down I found the option to turn off the password protected sharing.
Magically, my windows 7 machine showed up in the XP Network places!
Then I ran into a problem in which my 2nd hard drive - which is the one we back up all my data onto, couldn't be accessed by XP. And then I discovered it couldn't be accessed by Windows 7 either - which was very strange because I'd just been using it and it disappeared. So I booted into Vista and it couldn't see it either! It showed up in My Computer as "Unknown G:". If I clicked on it it just said "Folder is not accessible. Access is denied." I couldn't even do a chkdisk on it or see the drive label or find out how much disk space was used.
After a lot of frustration, I had to turn off sharing, re-take ownership of the disk and re-do all of the protections which I had done before and turn sharing back on. Finally the drive was back to normal in Vista. I then went back to Win 7 to confirm the drive was back to normal. It was. And finally, I looked at it from XP and I could see my data.
So it's working. But I have no idea why the ownership suddenly disappeared (became invalid)??