Yes you can network XP and 7 together. The trick to this is during network setup you have to change the workgroup name on your XP computer to match Windows 7. The default workgroup name on 7 is homegroup. Change the name to homegroup in XP. Next during network setup on your 7 computer when you reach the workgroup options the setup will generate a password to access your homegroup. Write this password down and don't lose it. It's kind of hard to retrieve if you misplace it (speaking from experience :) ) You should now be able to share your router and files. Hope this was helpful.
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