Slow network browsing performance using TCPIP/NetBios Microsoft File and Printer Sharing (no internal Server or DNS system)

I need to solve a problem for a small company with only two employees.  They are using peer to peer file sharing (no network server) between two Windows XP home edition machines and are experiencing slow internal network browsing performance.  

Both computers run Windows XP home edition

Computer one shares the C: drive and a few folders
Computer two connects to Computer one’s shared C: drive and folders.

Both Computer 1 AND Computer 2 experience slow network browsing performance.  For instance, when trying to open a saved Word document from within Microsoft Word (File…Open) there is a 10-15 second delay before Windows XP lists the files on either the same local computer or remote computer (nothing shared on remote).

Both computers run TCPIP (Netbeui is not installed) and are connected to the Internet via a DSL line.  There is no internal server or internal DNS servers.  I have tried using local hosts files on each computer as follows but this had no effect on network performance:            Computer1            Computer2

I assume Netbios and File and Printer Sharing is working correctly, however; network browsing is just horrible slow.  The 10-15 second delay is in effect every time you browse or try to save a file on the local or remote computer.

Gateway on both machines goes to an internal DSL modem
Both DNS go to Internet Service Provider DNS servers

The company is open to purchasing a cheap server solution.  Would a cheap NAS server have the same issues as this Microsoft File and Printer Sharing?
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you say that the computers have their gateway set to the DSL modem which is odd.  Do they have a cable/DSL router?  Usually when 2 or more computers share a DSL or cable line the computers are plugged into the router as seen below.  What is your setup???
internet-----cable modem----router|

most cable/DSL routers are also 4 or 5 port switches. so that way you dont have to purchase a hub or switch for the computers to connect to.

can these computers ping eachother by IP address?
can these computers ping eachother by hostname?
Sounds like a NETBIOS browsing issue.  Without WINS or LMHOST files, the PCs will eventually resort to broadcast in order to resolve the share.  Configuring LMHOST files on both PCs should clear up the problem..
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lonmoreyAuthor Commented:
Ok here is some more clarifacation:

Both computers can ping each other by IP address and by name.

The remote computer connects to the shared computer very quickly and there is no issue there.  

The computer with the shared C drive has the slow file system browsing performance including trying to browse its very own file system.  This only occurs  when using Microsoft applications such as Word/Excel, etc on its own hard drive.  If you use Lotus everything is fine.
lonmoreyAuthor Commented:
Ok I solved the problem by myself.  The local computer having file system browsing performance problems had static persistant drive mappings to a few computers that were no longer on the network.  I removed these mappings and everything is running as it should.

Thanks so much for the help.
glad you got it working,,,,, you can request your points be refunded by posting a question in the support area requesting so.
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