I could not get our Windows XP SP3 machine to connect to our Vista SP1 “server” machine.  I found the solution at:

http://www.techsupportforum.com/microsoft-support/windows-vista-support/227510-solved-vista-sp1-changed-sharing-behavior.html

Solution: The XP machine’s Local Security Policy had to be changed to enforce NTLMv2.

The user’s problem was described as follows:

I upgraded Vista Ultimate to SP1 today and after the update, I can no longer see the folder and device shares that used to be visible to another computer running XP SP2. If I try NET VIEW from the XP computer, I get “System error 58 has occurred” and no information. Priot to the upgrade, all of the network shares were visible to my XP computers. I also upgraded a laptop computer running Vista Home Premium to SP1, and it has no problem seeing the shares across the network, so the problem appears to be particular to either XP or maybe any non-Vista OS. Ideas?

And this was the solution:

I’ve solved the problem of not being able to see network shares on my Vista machine from an XP machine after installing Vista SP1. The problem was authentication level for LAN Manager. Vista defaults to NTLMv2, and my Vista machine only allowed that level. My XP machine was set for LM & NTLM, but did not deal with NTLMv2. I solved the problem by going into Local Security Policy on both machines and changing the Network security: LAN Manager authentication level to “Send LM & NTLM – use NTLMv2 session security if negotiated” on both. I had to reboot to have the change take effect, and the problem was eliminated.