Windows 7 Network Error Code: 0x80070035 Windows cannot access\\__

Let me state at the outset that I have had these two computers successfully networked in the last two weeks, but they will not stay networked.  This machine is running Windows 7 (64 Bit) and the other machine is running Windows XP Professional Service Pack 3, 32 Bit.  Both computers are set up to share everything in their C drives.  The XP machine has a D drive that is also set up to share.  In the last two weeks I have copied files back and forth between the two machines on all the drives.  Both computers still show up under the network folders for each machine.  Both computers are set up on the network with a workgroup name of HOME.  I have run the Network Troubleshooter on the Windows 7 machine and it does not detect any problems.  The Windows 7 Computer is named NEWCOMPUTER. The Windows XP computer is named OLDCOMPUTER.  I have also shut down the firewalls and Virus protection programs on both machines.  Network discovery is turned on for the Windows 7 machine.  File and printer sharing is turned on. File sharing connections are set to 40 or 56 Bit encryption.  Password protected sharing is turned OFF.  Windows is allowed to manage Homegroup connections.  Using the services.msc command, I set the Computer Browser properties startup type to automatic, the Server properties to automatic, the SSDP DEiscovery to automatic, and the TCP/IP NetBIOS Helper to automatic.

When I initially set up the Windows 7 machine, I tried to share the whole C drive with the Windows XP machine, but Windows XP would give an error message that said "Access denied you may not have permission..."  So I went into the Windows 7 machine and had to set sharing and permissions to full control for  everyone for every folder in the C drive.  Then the Windows XP machine was able to open, read, and change every file on the Windows 7 machine other than System files.  Now, when I click on the OLDCOMPUTER from the Windows 7 machine I get the error message "Error Code: 0x80070035 Windows cannot access\OLDCOMPUTER.  When I click on the NEWCOMPUTER from the Windows XP machine I get the following error:

"An error occurred while reconnecting Y:to\Newcomputer\C: Microsoft Windows Network: The Network path was not found. The connection has not been restored."

A GUEST account is also set up on the XP machine.  I am running a Netgear RP614v4****wired 4 port router that is connected via Ethernet cables to a Satellite Broadband modem.  There is also a printer connected to this same router.  Both computers can print to the printer via this router.  Both Computers can access the Internet.  They just cannot access each other.

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