I believe the way simple file sharing works, is that you can only use the guest account to connect with it on. That means no user shares. I had the same problem with accessing the C$, I couldn't do it without simple file sharing disabled. I guess when you turn it off, it just allows you to use specific users instead of guest to connect, that's my theory at least.

edit
i knew i should have spent that extra $50 on xp professional...
I don't know about that. There are a few more features, luckily I bought mine from my school for 10 bucks. Universities seem to have all sorts of discounts on software. Are you going to school anywhere, cause you should check them out.