I would like to create a lan between a Mac running 10.2.6 and windows machine running XP, would I need a ethernet crossover cable or a regular ethernet cable, also what settings would i need to change in both system's preferences.
If it is only two computers that are directly connected, use a crossover cable. If you have a number of computers or are connecting through a hub, then use regular ethernet cables.
Once you've got the physical connection in place, get the two machines to talk to each other. On the PC, make sure you have TCP/IP networking up for that adapter.
Then, set them to the same subnet and give them appropriate addresses. One handy method is to set up the PC as a DHCP server. For now though, here is a simple example:
PC:
Subnet 255.255.255.0
address 192.168.0.1
Mac:
Subnet 255.255.255.0
address 192.168.0.2
Once you have done this, open a Terminal on the mac and a command prompt on the PC. On each, type "ping 192.168.0.1" (using the address of the other machine) to see if you have a network path set up between them. If the ping fails, you need to recheck your network.
Good luck and may your Mac bring you many happy frags.