I have a small problem with my network connection at home. It works fine for both computers accessing the internet, but I cannot share files/printers and the recognition of the network slows both computers boot time abominably, it takes a few minutes to recognize the connection. My LAN connection is always reported as having limited or no connectivity as well.
You need a router. Look at Tom's Hardware router charts and get a good one.
Plug the cable from the modem into the WAN port and the cables from the computers into the other ports.
As far as sharing files is concerned you have to right click the drive you want to share and fill in the information and set permissions for everyone or who you designate.
You could connect both computers with Internet Connection sharing and a crossover cable also. I think a router is a better setup though.