Windows XP LAN Trouble

Are you sure you got it correct?

Using this procedure for static LAN ip's or DHCP (Obtain automaticly) you should ALWAYS be able to ping the gateway from both machines.

Can you ping your Gateway from both while set up like this?

Look at this page down to Setting up a computer.

http://www.homenethelp.com/web/howto/static-ip-address.asp

another

http://www.tmmworld.com/Default.aspx?tabid=161

Now for the HOSTS file. If you go back to DHCP and you put the entries as I suggested then you must remove them. They can not be there unless you have specified an IP as we have.

Adding entry to HOSTS file
http://www.frontpages-web-hosting.net/support/hostfile.editing.support.htm

In your case hosts file on one points to other computer and vice versi!

Mike