I'm having the exact same problem.  I can't wait to read what the suggestions
will be.  

Have you opened(on XP)Control Panel\Printers selected the printer, right click Sharing(or properties\sharing) and toggled the sharing option.

Once the printer is accessible, Vista will prompt to install the driver to the Vista machine.

The upgrade software(LLTD) for XP only allows the xp machine to appear in Vista's view map(it does not alleviate any networking issue though hovering the cursor on each item will display additional info on each item).

Additionally has Vista been set up properly in the Network and Sharing center.

I finally was able to resolve my problems and, embarrassingly, it turns out
my computer and printer names did not match between the two devices.  My
confusion came through the excessive use of common words such as HOME,
MSHOME, HP1510, HP 1510, etc.  Though I thought I had taken great pains to
ensure consistency, when I walked through the steps again (on both
computers), I discovered that the actual computer name on the XP device was
indeed MSHOME, even though it showed up on my Vista network as HOME (still
haven't figured that one out).  Also, when I viewed the networked printer
name on Vista (Start-Network then clicking on the network name), it saw
HP1510.  I was able to load drivers and submit print jobs which disappeared
into the ether (or maybe even became part of the dark matter in the
universe).  When I doubled checked the printer name on my XP device, it was
HP 1510 (with a space).  When I finally corrected both the XP computer name
(MSHOME) and the printer name (HP 1510 - with a blank space), the world
finally became a better place and I am once again able to contribute to the
death of trees.  

I grit my teeth as I write this, but the Microsoft instructions got me to
the right end result but I should have worked through them step by step on
BOTH computers.

Jade, I would suggest starting fresh, with ready access to both computers
and working through the networking instructions step by step, carefully
checking each computer at each step.

I hope this helps .... the red glow you see on the horizon is my
embarrassment at finding the cause to be my own inability to follow
instructions!