The external USB modem made by Apple is probably going to be the one to get. While others "may" work, it will be a case of trial and error until you find one that works correctly.
Apple does not make a router. Any of the well known brand name routers, Linksys, D-Link for example, will work perfectly well with the Mac and PC
Using dialup, you will need plenty of time to download the Software Updates for the Mac and for XP.
If it is at all possible in your area, you might want to seriously consider BroadBand.
Hope this helps
I am considering getting an iMac for the first time, perhaps using Bootcamp to enable running WinXP, also. Since I have dialup, I will need an external modem. Is Apple's modem the one to get, or will a generic model work just as well? Also, does Apple make a router, or will any brand router serve well?