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No, it might have been a hardware issue for one person, but in general problems connecting from a Windows7 computer to an older networked printer connected to an XP computer is a windows 7 issue that is a 3 step process to workaround. Here's the workaround: How to network attach a WinXP printer (which printer is connected to an XP machine) to a Win 7 computer:
STEP 1: Install and Connect "Directly" with your Win7 computer (not over the network).
1a) download and install the driver to the Win7 machine as if it's a local printer to the machine instead of using it over the network.
1b) connect the printer directly to the Win7 machine, and test the printer to make sure it works.
STEP 2: Reconnect to the old PC as before ... make note of the Shared Address
2a) now you can disconnect and reconnect the printer to the networked winXP PC which was previously connected to the printer.
2b) Start the "Add network printer" process on your Win7 computer, but do *not* complete it. All you are doing is getting the full address of the printer that you want to add. Make note of the address as you will need that address in STEP 3d, below. It will be of the format: //[computerName]/[printerName]
2c) click "Cancel" to abort the "add printer" wizard since we will add the printer manually instead.
STEP 3: Edit the printer setup on the Win7 computer
3a) In the win7's printer's panel (shows all the local and networked printers), there should now be an icon for the disconnected local printer you installed in STEP 1. Right-click that printer icon and select 'Printer Properties' (halfway down the menu ... do not click "Properties" at the bottom).
3b) Click the 'Ports' tab, then click 'Add Port'
3c) Select 'Local Port' then click the 'New port' button. Yes, we are tricking it into thinking it is a Local Port. Like I said "windows 7 issue". Blame Microsoft.
3d) Enter the port name which is the network address of the printer you found in STEP 2b, above. It's case sensitive so type it exactly as it appeared in that step.
3e) Click 'Close' on the Printer Ports window .
3f) The new port will now show as being selected with a checkmark. Click 'Close'.
3g) While still in the "ports" tab in the properties for that printer, make sure bidirectional support for the printer is enabled. Then close the "printer properties".
3h) Make sure that pause printing is *not* enabled (in the right-click-menu for the printer).
The icon should now show that it's online. You are now ready to print.
Note that once I somehow lost the ability to connect to the printer ... but simply reconnecting the printer directly to the Win7 machine caused it to remember, after-which the network connection worked fine again.