After asking some tech bods with a few more grey cells than me - Homegroup will only work for only linked windows 7 machines, and am informed its access only to shared folders and not able to download across the group - after many years i always go with the tried and trusted stick method never let me down or caused a headache -- as has been mentioned 7 to Xp can be a minefield due to differing folder protocols.
Due to not knowing where some peeps machines have been I always practice "Safe Stick"