XP Home can be networked easily. It isn't meant to be used in an office enviroment to log onto a domain but you can use it in a peer to peer network with no problem.

Share the drives on both PC's, make sure that both machines are on the same workgroup, enable DHCP on both and once the router assigns each machine an address, they will both be on the network and the Internet

Some routers do have a built in print server, I have one of these, works very well and you can print from any machine in the house

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