Admin login from XP gets Win7 Guest account?

I have two computers on an in-home LAN, one running XP Pro, the other Win 7 Pro.
When I log into win7 from XP, I enter the Win7 "Administrator" name and password (none at this time). But the (Compute > Manage >...) "Session" shown on Win7 shows a Guest account being used. Why is this?

(The Administrator account on XP also has no password.)

Are the passwords for network login and local login the same?
If they are separate, how are the passwords and enable/disable controlled for each type?

Lastly, I would like to login from XP with the Admin name and password and actually use the win7 Admin account. What must be done to allow that to happen?

Solution:
WARNING: Do not change the Administrator password if you used the OS to encrypt files or you will lose access to those files.

Select Start button, enter in search box "Local Security Policy", then select "Security Options", and then "Accounts: Limit local account use of blank passwords to console logon only". Read the "Explain" tab. Do not disable this policy for exposed computers. Rather assign passwords to all non-Guest accounts.

This policy will force a network login to use the Guest account when the login name/account has no password, as was the case in this problem statement. Note that the Guest account was enabled for all tests. To test this policy:
1) Remove the Administrator password on the Win7 system. Then log out and log in again on the Win7 machine.
2) Restart the XP machine. The password on this machine can be blank or not.
3) Right click on the Win7 Computer icon and select Manage > Shared Folders >Sessions; there should be no sessions listed. You may need to use the Refresh button at the top of the pane.
4) On the XP machine, log in as Administrator and via Win Explorer list the network computers on your LAN. Click on the name for the Win7 computer. Yiou should get a logon dialog box. For the user name enter "Administrator", and no password since the Win7 passowrd waas set blank. The logon should be successful.
5) On the Win7 machine, refresh the Sessions list; it should now list the Guest account.
6) Now on the Win7 machine, set a password for the Administrator account, then log out and back in again.
7) Repeat the entire process from step 2. You should again be able to log on from the XP machine, but the Win7 Sessions list should show the Win7 Administrator account being used.
8) Disable the Guest account. Start from Step 2 again, but remove the password from the Win7 Admin account. Log on from the XP machine should fail entirely because of the policy and the disabled Guest account.
9) Repeat step 8 but set a password for the Admin account. You should again be able to log on from the XP machine and get the Admin account on the Win7 machine.
10) You can repeat the above steps with the policy disabled, the Guest account disabled and the Win7 Admin password removed, and log in from the XP machine with a blank password. You should be able to log in and get the Win7 Admin account without a problem. You will also see an ANONYMOUS LOGON session.

Now you see why this policy should be enabled and the Admin password set non-blank.