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Personally, I like XP, and I've been using it since the preview release. I've had a few problems with networking, but most of those came from special settings I was trying to use. The biggest things, though, are making sure ICF is disabled, and making sure your workgroup and such are the same on both PCs. That solves a lot of the common problems.
As to the hub question, a hub is probably not a good idea (too slow), but a switch allows full-speed transfers for all PCs at the same time. Plus, a switch doesn't cost that much more (probably $10 more).
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Jeff Waegelin
Mechanical Engineer, Innovation First Labs
Lead Engineer, Team 148 - The Robowranglers
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