The fact that you are unable to copy files between hosts on your local network is also very interesting. Since you can ping the internal host, there is a physical and logical connection between the two, but when you try to copy files an error occurs.
The symptoms you have mentioned make me wonder if the problem could be due to personal firewall software, a worm/virus or a corrupt TCP/IP stack that's half working. With the above in mind, check your antivirus software and make sure it's up-to-date, and scan your PC and the machine you tried copying files off of. If there are more PCs on the network, be generous and scan them as well.
Next, if you have any personal firewall software, disable or uninstall it for the sake of troubleshooting and saving time. Keep in mind, Windows XP with Service Pack 2 has an enhanced personal firewall and the network adaptor also contains a semi-firewall that could be activated, so make sure you check them.
Lastly, if none of the above proves useful, your TCP stack might be corrupt. I'd suggest you visit support.microsft.com and do a search on 'XP – corrupt tcp stack' and 'reinstalling tcp stack on XP'. Follow the results until you find your solution.
This was first published in June 2004