[khonjo]

XP SP3 is used. The Simple File Sharing is not enabled.
Ping from Windows 7 to XP goes through.
The same log-on user name and password are used for XP and Windows 7.
The XP machine is visible from Windows 7.
Error message is "Unknown user name or bad password. The same message is returned when attempting to access from another Windows 7.
There is no problem networking between the two W7s. The W7 can access W95 or W98SE on the same network.
Any suggestion is appreciated.

[submix8c]

1 - Can't be signed on with same user/password simultaneously on both. You need UserA+UserB on both, and sign on with A on one and B on the other. That's what the "Shared Folder" is for.
2 - Have you tried this (also applies to Win7)?

A nice article. More info.

This subject has been around for a while. Searching MSFN would undoubtedly yield even more (with further details). I gave you Google "finds" for the sake of expediency. Even worse is the fact that you can access 95 and 98 from 7 but NOT XP!

Another more detailed article.

HTH