Win7 is great when connecting to another Win7. It actually works fine when connecting FROM Win7 to an XP machine but the other way round can be a bit hit and miss (not helped if you've set a password in 7 ??).
To eliminate some possible issues, make sure you turn off firewall in XP machine -- and, though Win7 claims to work round the problem for local connections, I would also turn off Win7 firewall.
every time i connect the cable i always see the "Connection Unidentified" in my connection status...
i tried everything i know just to enable it, but it doesn't work for me... what should i do...
I've only had a short go with Win7 so I can't tell you step for step.
You avoid setting a Homegroup. But you select Home for network type which assures minimum security. You select MSHOME as the workgroup (assuming you XP computer's Control Panel, System shows MSHOME as its workgroup).
Do not set a Password to the Win7 network.
Turn off firewall in XP and (though probably not needed, do the same in 7). Enable file sharing in appropriate folders on both machines.
Make an accurate note of both computers' names.
Note any passwords either Windows Password or Win 7 Network Password if you have set one (don't).
If connecting FROM XP run through the Add Network Places routine. Computer name seems to work as \\COMPUTERNAME\sharedfolder and be prepared to supply Windows password.
If you are still having problems check that your network adapter is functioning properly in Win7 as there can be driver problems apparently .
As I say it can be hit and miss connecting TO Win7 so I would start by connecting FROM Win7. There's quite a lot of XP to 7 networking info on the Microsoft Home site -- start by using Win7's Help.