Let's start with the client/server service. Click Start --> Control Panel --> Network and Internet Connections --> Network Connections --> Right-click the VPN connection --> Properties. Click the Networking tab. Make sure that File and Printer Sharing for Microsoft Networks is in the list of components for the connection. If File and Printer Sharing for Microsoft Networks is not in the list of components for the connection: Click Install --> select the Service check box --> click Add. In the Manufacturers box click Microsoft. In the Network Services box, click File and printer sharing for Microsoft Networks, and then click OK. In the list of components for the connection, make sure that File and Printer Sharing for Microsoft Networks is selected (check box is marked). Click on the TCP/IP protocol, then click Properties --> Advanced. Click on the 'WINS' tab and make sure that the 'Enable LMHOSTS lookup' is checked. Click OK on each form until you get back to the VPN properties main page. While you have the properties open, there is a box somewhere that says 'Show icon in taskbar when connected' (or something like that). Should be on the 'General' tab (I think). I don't have a XP box in front of me right now, so the location/label may vary slightly. Anyway, if you can find it, make sure that it is selected. Click Close or click OK.
Next, make sure that the share(s) you set up are network shares and not local shares. Make sure that the account (user) you are using on the client machine exists on the server and is using the same password -- the fact that you are connecting means that you are probably ok there.
Fire up the VPN. You should have an icon on your task bar. Right click on it and select 'Status'. Click on the 'Details' tab. There should be two addresses, client and server. These are the VPN addresses I wanted you to ping/search for. Not so much concerned about that now, if you were able to see the other computer by doing 'Search for Computer', but you will need the addresses for the next step.
Take a breath, we're almost there. Click Start --> Search for Files. In the 'Files or folders named' box, enter 'lmhosts.sam' and start the search. When the file is found, right click on it and select 'Open containing folder'. Right click on a blank space inside the folder and select New --> text document. You should get a new icon, and the filename should be highlighted. Type 'lmhosts' -- no '.txt' or anything like that the name. Press enter to save, and the icon should change to resemble the other files in that folder. Right click on the new file and select Open With --> Notepad (or Wordpad).
At this point, you should have Notepad (or Wordpad) open with a blank document named 'lmhosts'. You need two lines, should look like this:
xxx.xxx.xxx.xxx ServerName #PRE
xxx.xxx.xxx.xxx ClientName #PRE
Replace the xxx.xxx.xxx.xxx with your VPN ip's and the Server/ClientName with the name of the appropriate computer. Type the '#PRE' exactly as shown -- capital letters, no spaces. It doesn't matter how much space is between the items on each line - I usually use tabs to make everything line up real nice, but it doesn't have to. Click File --> Save, then close Notepad.
Open a command window. (Start --> Command Prompt I think). Type 'nbtstat -R' and press enter. Has to be capital R, rest doesn't matter. Report anything other than a message indicating Successful. Type 'nbtstat -c' and press enter. Lowercase c this time. Should have three lines for each of the lines in your lmhosts file (total of 6). Report anything different.
If all looks well so far, try NetNhood again and see what happens.
Long list, but I think this will get you there. If something doesn't look right, or if you need more explaination, post back. Of course, let me know if it works, too.
Good luck!