1. First, the hardware. Each PC must have a network card (installed properly of course). The other piece of hardware is a small hub or switch. I recommend going to CompUSA, Circuit City or elsewhere and purchasing a 'Network Kit'. It will come with 2 network cards and a small hub and costs less than $100. There is a way to connect 2 PCs with a cross-over cable, but trust me, this is better.
2. After the network cards are installed in the PCs and connected to the hub, the next step is configuring the PCs. Go to the Control Panel and open up Network. You should see your network card listed there. You will also see a protocol listed with the network card (usually TCP/IP is loaded by default). If you are going to use the PC for access to the internet, leave TCP/IP loaded.
3. The easiest protocol to use for a small network is NETBEUI. Click 'ADD', double-click 'PROTOCOL', Select 'MICROSOFT' and 'NETBEUI'. Click 'OK'.
4. Next we need to add a client. Click 'ADD', double-click 'CLIENT', select 'MICROSOFT' and 'CLIENT FOR MICROSOFT NETWORKS'. Click 'OK'.
5. Next is sharing. Click on the button 'FILE AND PRINT SHARING'. Check both boxes. Click 'OK'.
6. Now we have to set up the workgroup. At the top of the network properties window, click 'IDENTIFICATION'. The are 3 boxes to fill out: COMPUTER NAME - each PC must have a unique name WORKGROUP - the workgroup must be EXACTLY the same COMPUTER DESCRIPTION - this is optional
7. Click 'OK' to close network properties. You may need to supply your Windows CD. After it's done copying files, it will ask you to reboot, select 'YES'. Your PC will reboot.
8. When the PC comes back up, you should have a logon screen. YOU MUST LOG ON! Choose a name and a password and click 'OK'.
9. Once you PC finishes booting you should be able to browse 'NETWORK NEIBORHOOD' and see the other PCs. If you want to share anything, simply right-click on it and select 'SHARING' (for instance your 'C' drive).