Sharing Files Between XP and 7

I'd like to be able to share files and stream media from one PC to another. I have a D-Link DIR-615 router. This is a very popular theme, and I have read many articles about it. I don't understand what I am doing wrong, as I have done this in the past at someone else's house and for some reason this is not working for me.

1) I have created user accounts on both XP and 7 called xp7.
2) They have the same password.
3) They are both members of the administrator's group.
4) XP: Tools>>Folder Options>>Use Simple File Sharing DISABLED
5) 7: Tools>>Folder Options>>Use Sharing Wizard DISABLED
6) Both computers are members of the workgroup WORKGROUP.
7) They can ping each other.
8) I can use Remote Desktop to log into XP from the 7 computer, but I want do connect to this computer using Windows Explorer, not Remote Desktop.
9) I have created a share on the XP box called 'Downloads' and have added the XP box's local user, 'xp7', to the share's permissions list and given it full control.
10) I have disabled Windows Firewall on both machines.
11) AVG Internet Security 2011 is running with default settings on the Windows7 laptop, and AVG Free is running with default settings on the XP machine.

What's happening is that when I browse through Windows Explorer on the Windows7 laptop to find the XP machine and try to connect to it, it asks me for credentials. I enter the correct credentials and a second later it asks me again. This continues indefinitely. I don't understand what else I am missing. I have tried entering 'headless\xp7' to be certain that it understands that the credentials I'm attempting to connect with are stored on the XP machine and it doesn't work. I have also tried simply entering 'xp7' as the username, and it has the same effect.

Any suggestions?
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  1. Thanks for the link, Hawkeye22.
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