Firstly, do you have the Windows firewall on? If so, you probably need to turn "file and printer sharing" on in the exceptions tab (Start | Control Panel | Windows Firewall - choose Exceptions tab). I guess you would need to do this on both PCs.
What IP address do the two machines have on their network cards (go to Start | My Network Places - choose View Network Connections - click on your network adapter on the right, bottom left will show you something like:
Compare the two machines, and if properly setup, the IP address should have the first three numbers the same and the last number (25 in the example above) different.
Do your workgroup names match? (Control Panel | Performance and Maintenance | System). File and Print Sharing won't work otherwise.
Lastly - Windows XP help is actually pretty good - go into help and search for "File Sharing" - first option is a troubleshooter - you'll probably be surprised how good these options are...
EDIT - when you get the Internet Connection shared, you could easily remove network access by disabling the network card from your end (from the screen shot above, right click on the adapter and select disable) - you would still be able to surf but her connection would not work...