XP, like all Windows versions, is fine for basic networking. Just right click on a folder and share the folder over the network. How you setup the physical network (e.g. using a normal switch/router or the ancient technique of Ethernet crossover cables - still useful for laptops sometimes) is...
As a former IT geek, I can confirm that ALL devices break eventually. I also cannot recommend enough 1) Acronis for system image and/or file data backup, 2) use of now cheap secondary hard disks so that your PC system is always online (e.g. look into RAID which is available with almost all good...