2 person lan lags

I have some networking problems. First my setup is an old 700Mhz athlon pc that I use. My brother has a new 2.8ghz 800fsb 1gb ddr400 geforcefx 5600ultra, serial ata harddrive, all the good stuff. We have a crappy netgear 5 port 10/100 switch between the two. connected to my crappy computer is a dialup connection that is shared successfully. Both run WinXP Home
Problems:
My computer, computer1, doesn't see his comptuer, comptuer2, in my network places. computer2 also doesn't see computer1, but internet is shared. No firewalls, xps or third party.
Other problems is that computer 1 can host a mp game, and computer 2 can join. but comptuer2 cant host a game, i cant connect. So when he plays he lags like a mofo. Only 2 computers hooked up to this lan and it lags fairly bad, and the game is 3 years old so its not that graphics intensive. the host, me, plays fine even with an old computer. and he can play single player without any lag obviously.
I have my computer set to 192.168.0.1, and his is 192.168.0.2.
Anyone have any idea what could be wrong? Cant see each other although can share internet. And a small 2 computer lan, at 100MBps, lags fairly bad (ive been at lans with the same setup with 5-6 computers and no lag). hope someone can help.

We're both in the same workgroup, couldn't see each other at all if that were the case, and nothing else is in the switch, just us 2. And it is a 10/100mbps switch.

Make sure QoS packet scheduling is enabled. Also, check the computer names....that is how XP identifies the other computer. Make sure both of you have the same subnet and group...subnet should be something like 255.255.255.0

Also, the "crappy netgear 5 port 10/100 switch " could cause many things to lag. Try switching ports with your cat5 cable. Also, connecting your computers to each other through the hub should be crossover cable and not regular cat5 so that the computer can tell the difference between 10meg connection (internet) and 100meg connection (LAN). Make sure you have your connections right.

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<b>It is always brave to say what everyone thinks. </b> <i>Georges Duhamel</i>

TKS