Hi
First Check whether your XP machine is a part of Domain or workgroup. Logal failure indicates this machine is not being recongnizes by domain or workgroup. You may need join this machine to Domain in case of your network has domain structure. Since you can ping this machine i thinks there is no problem with network setting.
This problem also accure when you upgrade machine from SP1 to SP2 and select all option. In that case you need to uninstall SP2 and again install it with default setting.
Hope this will help you to rectify problem.
Regrds
Siddhpal Patel