Problem, Networking Vista and Xp

I Have two computers (reffered as intel and amd), both connected via LAN (peer to peer). I Have a broadband connection. The Amd one has vista Ultimate SP1 loaded and intel one has XP SP3. Both are pinging each other properly. But, vista(amd) giving error saying it does not have permission to access intel. On the contrary, intel can map network drives. Again, i have done Internet Connection Sharing and there is an icon near the workgroup computers titled "Internet Gateway Device ". but, xp(intel) cannot open any site. Please Help this is very important.
The configuration for the Intel machine is Intel Atom @ 1.6GHz with 2GB of Ram, Seagate 160GB Hard Drive. The AMD Machine configuration is in my profile.

 

This seems to be a popular problem without a simple answer. Let me ask you this:
Do both machines require a password to log in? I have found that the sharing will not work unless both machines have a password.

 

No machines requires a password.

 

That always makes networking harder work. Using passwords is ALWAYS best practice.