Networking My laptops

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I've got two new Windows XP laptops (40gig, 512mb RAM..both computers have these specs). Though, I'm having troubles networking them together. I want to connect them together to copy my music and files over, and LAN with a mate. Although, all I have is a crossover cable, and an ADSL modem. When my desktop computer was working, I connected it via the USB plug on the modem, and connected my laptop to the ethernet plug of the modem. Doing this, I could play LAN games, but I couldn't swap files. The crossover cable I have, Windows won't recognize, and I've tried it many times. I tried fiddling with the Windows Networking wizard, and all that. But it didn't work.
Any help?
 
"Won't recognise" means what? Network cables are not supposed to bring up the "found new hardware" wizard :p

If you mean that you can't get a link light on the NIC or that WIndows reports the LAN connection being disconnected, then you have either cable or NIC problems.

Assuming that the cable is OK, play around with the link speed and duplex settings of your network cards. Set them both manually to the same setting (a la 100Mbit full duplex). Gigabit and plain autonegotiation are unreliable.
 
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