“I’ve a wireless laptop and desktop computer. The laptop runs windows XP Pro while the desktop has XP Home. I understand that the firewall on both PCs has to be off for this to work. Is this true?”

From reading the above we can conclude that you will have to configure your firewall software for recognizing of your network as the trusted LAN. You must always keep your firewall enabled which enabled you in misconfigured firewall. It is a common cause of network problems which is suffered by many people forgetting the give ports and programs that can access and help you in communicating over the network.