When both machines are on the network, do they both get IP addresses? (Use the IPv4 address if it's labelled as such in Win7, XP can't browse to IPv6 shares.) Have you tried browsing to the IP addresses manually instead of through Explorer (sometimes a machine won't show up but IP works) - you can go to Start > Run > \\IPADDRESS\ > OK, e.g. try opening \\192.168.1.100\ if thats the IP of the other machine.

I was going to attach a document called "Windows 7 and HomeGroup Downlevel Sharing.docx" I downloaded from Microsoft a while back for whenever I get Windows 7 some day and need it, it explains sharing between Windows 7 and other OSs like XP, Linux, and MacOSX, but it seems 3.5 MB compressed is too big to attach You could google for the file and download it yourself though Or maybe Bing is more appropriate in this case