Connecting Mac and XP PC through ethernet, for internet(from airport) and file sharing

Hello,
    I have internet through my Airport on my macbook with OSX 10.4, but not on my PC with XP running. I would like to get Internet (and preferably file sharing) through an ethernet cable. After trying to get the internet to transmit to the pc and failing, I settled on just getting the two computers connected using the ethernet cable, as I found that if the Airport and the ethernet were both on, one of them would stop working.

So I:
     turned off the Airport
     in the Network box in the mac set
          the IP Address to 192.168.1.3          (The Airport is set to 192.168.1.2 - should these be the same?)
          the Subnet mask to 255.255.255.0
          the router to 192.168.1.254
     In the Sharing->Services box on the mac enabled
          Personal File Sharing
          Windows File Sharing
          Personal Web Sharing
    In the Sharing->Firewall box disabled the firewall
    In the Sharing->Internet box enabled sharing from Airport to Built-in Ethernet (not important just now, as the airport is off.)

Then, on the PC, Control Panel->Network Connections->Local Area Connection->Properties->TCP/IP->Properties:
     set IP Address to 192.168.1.1
     set Subnet mask to 255.255.255.0
     set Default Gateway to 192.168.1.254
     left the DNS server info blank
Add filesharingto the exception list in the windows firewall

With this, I can ping both 192.168.1.3 and 192.168.1.1 from either computer, and I can find an apache server if I open http://192.168.1.3/ from firefox in XP.

However, I cannot see any computers in any network place from explorer. When I try to map an network drive from Explorer->Tools->Browse I cannot find the mac in the workgroup network. I can enter \\192.168.1.2\[macaccountname] to get to entering a password for a user on the mac, but once it has been entered, the password entering box immediately reappears with the username replaced with [pcname]\[macaccountname] and this goes no further.

Worse, when I turn the Airport back on on the mac, I can no longer ping the mac from the pc (and nothing else works either).

I am a newbie in this area, so I don't mind the comment "you'll have to start all over again". So what do I need to do to get Internet and file sharing set up over an ethernet cable between a pc and a mac, with the internet being supplied from the mac's airport?