Ok so its Sat morning and I am still a little bit confused.
You wish to use the internet from both PC's??
You wish to share files and printers on both PC's?
I assume you are sucsessfully using the switchbox which allows me to use both PC's at the same time but using just one 19" CRT, mouse and KB.
The xp setup disk, is that the one created using the Windows XP networking wizard?