Solved: Access problem.

If StumpedTechy didn't get you going, what OS(es), what Service Pack Level, and if XP is it Home or Pro? If XP Pro, are you using Simple File Sharing?

 

Both computers are connected to a router, right?

There are numerous things that can cause access problems; but, per StumpedTechy, firewalls are the first suspects, perhaps the most frequent, and one of the easiest to check.

As long as you told the Network Set up wizard to do file and printer sharing, the Windows firewall is configured OK. But any 3rd party firewall will cause exactly your problem. If you have Zone Alarm, Norton, etc., you have to uninstall it or configure it properly to allow access from the other computer.

 

Your condition of having internet on multiple computers through a router, but having file sharing problems, is not uncommon. Glad you're pinging--without the basic connectivity shown by a successful ping there is little point in trying more complicated things. After getting connectivity and a workgroup established it can take up to half an hour or so before "view workgroup computers" gives the correct results; from My Network Places you can Search for the other computer to speed things up.

Now that you have the Trusted list populated, is there a separate option to ENABLE Trusted Zones?

You're still getting no response pinging either direction? Following are a few things to look at or try.

Check to make sure the following services are running (Start - Control Panel - Administrative Tools - Services): Workstation, Server and TCP/IP Netbios helper.

You may have corruption on the machine with "Access Denied." Check out the last post in this thread http://forums.techguy.org/t376628.html for an easy register fix. If that doesn't work, check out the other threads referenced in that thread.

 

"Do you think there is any sense in starting over again?"

Not quite ready to answer that yet.

What is the IP address on each machine?

On each computer ping itself by address and name, the router, and the other computer by address. If the other computer (by address) responds, then try by name. (That's 4 or 5 pings on each machine.) Which ones failed?

If any failed, there is still a connectivity problem that has to be solved before either starting over or going forward.

 

"Well, each of those entries [services] I was asked to check were "started"."

On BOTH machines, right?

That successful ping of bedroom from living room confirms basic connectivity. Now we gotta figure out what's preventing the complete deal.

I have been assuming that you have file and print sharing on BOTH machines. Let's verify this via (on each machine):
Network Connections - right click on the connection - Properties - Advanced tab - Settings - Exceptions tab.
There should be a check mark by File and Printer Sharing

If those services listed earlier are started on both machines, and File and Printer Sharing are confirmed on both machines, the only thing I can think of is (still) firewall.

Note that neither computer could ping the other. Now, after only changing firewall settings, you've got a ping working one direction. If you're still with me, I suggest completely UNINSTALLING Zone Alarm (at least on living room), restart each computer, try pinging the other by address and name again.
Terry