OK I cracked it - after many hours of sweat and tears.
1. Run the network setup wizard on your XP machine.
2. Make the XP machine the machine through which other computers connect to the internet.
3. Choose to make a netsetup disk for your ME machine.
Then use the netsetup disk to set up the connection on the ME machine making sure you choose to connect to the internet through another machine.
I was able to see shared files on both computers.