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I'm using 2 Win Xp Home edition computers. The one computer can connect to the other fine, and can see whatever documents i shared off that computer. The other computer however, when i try to connect in network it says Logon Failure: The user has not been granted the requested logon type at this time.
 

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Logon failure: the user has not been granted the requested logon type at this computer

If you see this message the following should be done on the computer containing the shared files:

Download the following and install it

Windows Server 2003 Resource Kit Tools
http://go.microsoft.com/fwlink/?LinkId=4544

after installation is complete, click on: Start, All Programs, Windows Resource Kit Tools, Command Shell

Then enter the following commands. (Attention: they are case sensitive.)

net user guest /active:yes
ntrights +r SeNetworkLogonRight -u Guest
ntrights -r SeDenyNetworkLogonRight -u Guest

The first command enables network access for Guest, the two subsequent ones change two different policies to allow network access for Guest.
 

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Hopefully the first suggestion will work. See it posted a lot around the Internet (even on this forum two years ago) exactly like that so it has helped.

If not you might also might try a registry edit.

Run REGEDIT
Go to HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa
Make sure the entry "restrictanonymous" is set to 0
 

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This has fixed this problem in a number of cases, but not all cases. :)
 
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