[Wetzel]

First off, internet exploder doesn't know what you are using for your internet connection. XP handles that.
Secondly, dos and XP do not mix well. They can, but it is a pita.
Thirdly, I've never dealt with a computer sharing its internet connection like that. We didn't bother networking the house until 4-5 years ago when we got our cable modem.
Fourthly, try and set up the laptop to dialup and share that with the desktop. XP has much more powerful and easy to use network creation features. Me was never really designed to be a network OS.

Good luck.

Wetzel