These are the problems I am encountering.
XP can access Windows 7, not the other way around (which is fine, because I don't need it the other way currently)
File transfer is too slow like 0.031 MB/s even though netperf and netCPS list around 8-9 MB/s.
I disabled firewall on both computers. Both are same workgroup. I left homegroup on Windows 7. Windows 7 sees the connection as unidentified network.
10.1.1.2 (XP) and 10.1.1.1 (Windows 7) Subnet mask 255.255.255.0 Default gateway and DNS are empty for both of them.
Both computer are connected to internet using wireless (using home network), and both of them are connected to each other using wire!
If anybody has any pointers, do let me know. I have no problem doing such setup with both computers being Windows 7. This time one of them is XP though, and that seems to be the problem.