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I'm not sure if this will solve your problem, but I have seen peer to peer networking not work unless you set up shares(sharing) on both computers.
Other things you may need to do is setup the accounts that are used on both computers (so that each login account/password can be used on both pcs).
I have seen it take forever to detect other pc's on the network, and solved that by running netbeui (available on older MS os's but not xp it seems) and/or netbios.
You also will want to check your firewall settings. (i.e. if you are using zonealarm, or something similar, you will want to setup the local ip addresses as trusted so that they will see each other on the network)
Hope that helps solve your problem.
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