Is this still something that can be done? IIRC you can get a standard network cable and plug it between two network cards but I've never done it and in these days of wireless, haven't heard of anyone doing it for a while.
For reference one PC is W7, the other XPSP3.
Yes you can do this, though you might need a cross-over cable.
However, if your cards are newish they may well support automatic MDI/MDI-X configuration . In which case a normal cable will work.
This set of pages explain in depth what to do, cable wiring and XP configuration. This may be a little bit overkilling, since you probably just need to the confirmation it is possible to crosslink.
http://www.conniq.com/WinXPNetworking_Ethernet_direct_connection.htm
Note that Ethernet sockets are protected against bad wiring, and trying a solution cannot be harmful.
Also note that network cards may handle crossover thru software, with a normal cable (auto MDIX): http://en.wikipedia.org/wiki/Medium_dependent_interface#Auto-MDIX
A comment that may be not appropriate to your case: Ethernet LAN usually run at 100 Mb/s, at best 1Gb/s (depending on your LAN adapters, and also your router / switch). If this is to copy data from one computer to another, sometime it is best to use other links (USB, eSATA), or even to use an external intermediate storage.
In addition to the information provided about the type of cabling you will need for this setup you should also observe the IP configuration of each machine. Operating systems may assign a "169" reserved IP address; however, I recommend assigning an IP address to each machine to create a network between the two.
