That's how Windows XP works when it's installed on an NTFS disk
partition using "Simple File Sharing". It doesn't allow sharing the
Documents and Settings, Program Files, or Windows folders.
You can share subfolders within those folders, e.g. you can share
"C:\Program Files\Outlook Express" and access that folder from another
computer on the network.
One solution to the problem is to re-install the operating system on a
FAT or FAT32 disk partition. There are no sharing restrictions with
those disk formats.
A less drastic solution is to disable Simple File Sharing, which
allows you to share those folders.
With XP Professional, you can permanently disable Simple File Sharing:
1. Open My Computer and click Tools | Folder Options | View.
2. Scroll to the end of the advanced settings.
3. Un-check "Use simple file sharing (recommended).
With Simple File Sharing disabled, right click the desired folder,
click Sharing and Security, and share the folder. Then, click the
Permissions button to specify network access permissions, and click
the Security tab to specify NTFS file system permissions. A user
needs both types of permission in order to access the share. For
details of how to set permissions, see this web site: