@tomos:You don't mention what version of XP is on either machine, the workgroup designation depends on the version of XP you're using, the defaults are:
XP Home - MSHOME
XP Pro - WORKGROUP
You'll need matching workgroups if you want to be able to easily compare directories side-by-side or use a program like
Beyond Compare or
WinMerge, (while they can take an IP address, it is easier if you can browse to the respective directories that you want to compare using Windows Explorer).
If you want step-by-step instructions then I don't think it's going to get much more step-by-step than Lee Indy's
tutorial - all 48 steps at one step per page, (makes me want to chew my arm off but hey

).
I've walked through them and it looks very simple to follow, pictures are included where necessary - there's also a tutorial for connecting via a
router.
No offence but considering your level of expertise in this, after finishing transferring/comparing files/directories I would recommend you unshare
ALL directories (folders) you might have shared from the respective systems. (You really only have to share folders on one system and just use the other to browse/copy any files/folders.)
If your firewall is proving to block the connection then there is also tutorials on how to turn the most popular ones off
here.
REMEMBER to turn it back on BEFORE connecting to the internet.EDIT: He seems to be relying on APIPA, (169.254.x.x), addresses to be assigned by default, (to save the reader from delving into network settings), as such it can take 2-3 minutes before they are assigned - the amount of time XP takes to decide there really is no 'outside' world

EDIT: Boy my grammar goes to pot sometimes - corrected.