password protecting a wireless network

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I'm a network noob. I have two computers (one winxp, one win2k) networked through a d-link 614+ router. One computer is directly connected, the other uses a wireless receiver. I want to make the network as secure as possible, since the computers are sharing a lot of important files (financial stuff, etc).

I have enabled 128 bit Hex encryption through the router. I also wanted to set it up so if a user on one computer tries to access the other, they need to enter the password. So I set up different users on each computer, with passwords.

now, when the win2k user tries to access the winxp machine, they are prompted for a password. but when the winxp user tries to access the win2k computer, they are not asked for a password.

so i have a few questions...

1) does it sound like i'm doing things right?
2) is setting users and passwords really going to secure the network, or is there a better way?
3) is there any way i can set it up so that I don't have to log in when the machine boots, but I do have log in to access the remote computer?

thanks for your help.
 
I would set the router up with the mac addresses for the systems that you want to have use of the network. This way only systems having authorised macs will be allowed wireless access no matter what. This should be described in the router's manual.

The rest of your answers should be found in help and support/user accounts. Dig around and read.
 
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