I can further suggest this link.. which is Microsoft telling you what to do, with a helpful video.
http://support.microsoft.com/default...b;en-us;304040
However in answer to your questions and one more idea.
Click Start>My Computer>Tools>Folder Options>View. Scroll to the of "advanced settings" and tick "Use Simple File Sharing"
The everyone account is a benefit of NTFS file system by giving the ability set different levels for file sharings and various other things. This means that you can control which users and groups can read, execute and modify folder contents etc. You could use NTFS to prevent all users, except for your user account, from viewing or changing your private information.
To use NTFS file permissions, your HDD has to be of th NTFS system. XP has a simple procedure for converting but be aware that once you have converted to NTSF you can't return to the FAT/32.
XP automatically allows access to the "everyone" account over the netowork. If you were to delete this account you would actually have more control over who accesses your computer. You want to make sure it IS enabled, because it may have been disabled during your efforts?
Go to Control Panel --> "Administrative Tools" --> "Local Security Policy".
In the Security Settings branch, select Local Policies --> User Rights Assignment.
On the right hand side, double click the setting for "Access this computer from the Network". Check that "everyone" is on that list! If so, great. It not, "add user or group" and go for it.
Good luck again. I'm sure that Micro$oft link will be of use.
Dan