Ok these are the results of fighting with the shares this morning and talking with shrink to clarify the main issue.
 
***warning this is not really secure***
 
Part 1.
 
Win2k box connecting to shares on a WinXP box
 
**this has not been tried with any other account other than the admin account on my win2k box**
 
First ensure the admin password on your win2k box is the same admin password on your winxp box(right click my computer and select manage, under users change the password for admin)
 
Next, on your WinXP box go to start/administrative tools/local security settings and change Network access:Sharing and security model for local accounts to classic mode.
 
Lastly enable a share on your winxp box and leave standard anyone permissions(setting up sharing will now look just like win2k)Now try and connect to the share via win2k, intead of being prompted for a user/pass or getting a failed connection you should log right in and see the shares.
 
This was done on my win2k box admin account (to)-> my seldzar account on my winxp box.
 
Changing the share to classic mode seems to keep the shares after a reboot(even with the reset crack)
 
part 2.
 
Winxp box connecting to a winxp box share
 
This one is a lot more complicated, it seemed no matter what I did I always got a failure even connecting to the box so here's the way around it. (this involves quite a bit mucking around, be warned)
 
First, on each WinXP box go to start/administrative tools/local security settings and change Network access:Sharing and security model for local accounts to classic mode.
 
Enable a share on each box.(if you followed through part 1 there is already a share on the second machine)
 
 
Here's the tricky part, log in on WinXP box1 as a different user or in win2k if you dual boot Or log on in safe mode under the administrator account.
 
Ensure you show all hidden files(folder optins) and copy all the contents of your current regular user folder(mine was documents and settings\seldzar)into the documents and settings\administrator folder.(This will transport most of your settings, icons, cookies etc over to the admin account)
 
Right click my computer and select manage and browse to the user section. Delete the user account you normally use so that the administrator account comes up on boot(if you have any other users, ensure none of them are aministrator users or else administrator might not comeup, hell it might not come up anyway being that I haven't tested that far)
 
Ok once the regular user account is deleted reboot and winxp should come up with administrator as your log in option. Once logged in and if all was done properly it should look almost exactly as your user account was with a few tweaks you may have done that need resetting.
 
You need to do this to both winxp boxes if they are to access each others shares. You also need to ensure both administrator accounts have the same password.
 
So in the end of this part you have:
 
2 winxp boxes.
2 administrator log in accounts set up as your normal accounts.
2 administrator passwords on each winxp box that are the exact same.
2 shares, one on each box.
 
You should now be able to go back and forth to the shares on each winxp box from within winxp.
 
If this doesn't work for you then I really don't know what to say other than it's working for me right now and you may have done somethign wrong or I didn't explain something properly(or even missed something)
 
Post your results here if your brave enough to mess with your accounts in these unscrupulous ways.
 
Edit: Spelling fix