Depends what firewall you use. I know for a fact that Zone Alarm blocks local network traffic unless you tell it not to.
To share you printer, first make sure that File and Printer Sharing is enabled. To see the File and Printer Sharing go to My Network Places, then View Network Connections. Right click on your network card and select properties. If you don't see File and Printer Sharing in there install it. Most copies of xp, especially the pro version, have that already installed though.
Then go to Start, Printers and Faxes, right click on your printer, and select Sharing... check all the boxes that apply (sorry at work so don't have any local printers to see all the options on). Should just be like two boxes to check to share the printer. Should work after that. On the other printer just add a printer and when you have the option of either a local or network printer, select a network printer. If you get any errors along the lines of permissions or if you can't see the printer, make sure you don't have any firewalls blocking the connection.
