Possible, yes. The easiest way to do this would be to get a switch or router (gigabit if your PC supports it for the fastest speeds), then connect the computers via ethernet (through the router). You could also do this with a crossover cable, though I haven't done a setup like this. You can enable file sharing on the Mac in system preferences (sharing), then go into options and enable Windows (SMB) file sharing as well. On windows, just enable file sharing as normal (or just enable FS on one of the computer if you only need to access one common folder).
Windows XP is somewhat of a nightmare for networking with workgroups and such, so there may be some additional steps you need to take. I've done this exact setup for relatives that I will see tomorrow so I can look into specifics if you get hung up.
Okay great. Thank you so much. I will not have the PC here for a few days (borrowing it from my fiancee) but I'll let you know how I get on with it. I just wanted to know if it was possible, but it sure makes life much easier knowing that this can be done. I appreciate your help.