First I suggest you consider upgrading the XP PC. XP and Windows 7 don't discover each other very well, and XP is rapidly becoming unsupported and obsolete. MS will be pulling the plug on the last remnants of support in April. Download the free Windows 8 upgrade advisor from the MS web site and see if your XP PC can handle Windows 8. If so you can get Windows 8 in stores for $100 to $140. Of course there's the new PC option too.
The other thing you can try is Network Magic which always worked for me. You can't download it from Cisco any more, but there are other places you can get from if you do a Google search.
I have a Win 7 machine and a Win XP machine in my home network. The Win 7 machine has a printer attached to it, and I tried to set the XP machine up to use this printer as well so my kids can print off their homework and so on. It almost worked - the admin account and two of the three kids' (limited user) accounts can all see and use the printer. However, one of my kids can't use the printer from her account. It shows up, but always with status 'Unable to connect', and all printing jobs from her account fail.
Naturally the one who can't use the printer is my eldest, who's in her first year of high school and therefore has much more need to print things out than her younger sibs!
Historical detail follows, but that's the gist of the problem. Any ideas?
I initially had some trouble setting up the printer; I started by adding it on the admin account, but then none of the limited user accounts could see it, nor could they add it because the printer already existed on the system. Then I tried it the other way (removed it from all accounts, then set it up on a limited account first) - but no matter how I varied it, whichever account I set it up on first was the only one that could see it, and no other account could add it.
Eventually (thank you Internets) I managed to get the printer installed for everyone by using a printui.dll command and adding it as a per-machine connection. As I said, this works perfectly for nearly all of us, but for some reason fails from one account. I'm at a loss as to where to look to start tracing the issue.