Some more details:
How are you connecting with each other? Since you are talking compression rates, I'm assuming some sort of dial-up connection. If you are connected via a direct dial-up connection (modem on your computer dials directly to modemon his computer or vice versa), you really aren't using a VPN connection. The connection info you are seeing is related only to your dial-up connection (either to his computer or to an ISP) It doesn't really have anything to do with whether the VPNconnection was successful.
Some confusion:
In one sentence you state 'his PC ses you and accepts your username and password.' What username and password does his server accept? In another sentence, you state "we can't see each others computers." What exactly do you see? Are you talking about being able to ping each other?
Are both computers members of a common workgroup or domain? If you aren't members of a common workgroup or domain, you won't be able to browse each others computers regardless of whether or not you both have file sharing turned on. Have you tried connecting to shared resources using FQDNs. Also, even if you both are members of a common workgroup (vs. domain) and user accounts for each of you aren't set up on both computers, you still won't be able to access shared resources.
Hope this helps.