The error is “windows security enter network password”, no matter what password you enter you will not be able to connect to your Windows XP machine from your Windows 7 PC.
The way that I fixed the problem was to open the local security settings by going to the run box and typing “secpol.msc” then going to local policies, security options, then network security: LAN Manager authentication level, you will select the second one on the drop-down menu with NTLMv2, Send LM & NTLM – use NTLMv2 session security if negotiated. This is what fixed the problem for me.