I'm confused by your request. You say you want to connect the PCs. Connect specifically to what?
If the upstairs PC can connect to the internet (wirelessly through the Netgear router downstairs which is connected to your cable modem or whatever...), then you have connectivity. If the upstairs computer doesn't connect to the internet, then you need to start working on that. First, set all security OFF in the wireless router to simplify things. XP will give you a warning message that you are about to connect to an unsecured location, but go with it for now. If you can connect, then start locking down the security one step at a time. Change the SSID, set your WEP password, and MAC filtering, in that order (though as Bob points out you can use MAC filtering alone if the WEP stuff becomes troublesome). Be sure your connection works at each stage of the changes so you know exactly what item you have to work on if it doesn't work right away. If you get no connectivity at all (i.e., the XP wireless network connection dialog can't find the Netgear to connect to it), then you are going to have to figure out why - could be a physical issue with the layout of your house (too far or lots of walls in between) or a hardware issue (as Bob points out, firmware usually needs to be updated even on brand new devices or incompatible devices - despite the apparent ''standards'', some brands don't play well with others).
Once you have connectivity to the internet, then you can work on connectivity between the upstairs and downstairs machines if you want that. First, you will need to manage the firewall settings - with the security emphasis in Service Pack 2, the firewalls are activated by default. That means nobody gets in, including your internal upstairs-to-downstairs connection attempts. Second, you'll need to set sharing parameters for the particular folders on each machine that are to be shared.
dw