Microsoft has written an 8 part article which details the steps necessary to configure a direct cable connection with Windows XP Home Edition. The articles are:

 Introduction: Configure a Direct Cable Connection with Windows XP Home Edition.

Connecting the Cable.

Setting the Computer Names and Workgroups.

Sharing Resources.

Configuring the Direct Cable Connection.

Configuring TCP/IP.

Using NWLink IPX/SPX/NetBIOS Compatible Transport Protocol.

Connecting the Computers.