Can your XP computer ping this printer and confirm its existance? I would also make sure the printer is awake on the network by sending a print job from the Win7 machine to it first.
Network printer installs are simple to fool. All you need is a printer object that is pointing to anything. Once you have a printer object in your printers and faxes folder then open up the printer properties and take a look at the ports tab. You should be able to create a custom TCP/IP port and fill in the IP Address of your printer. After the IP has been configured as its port the XP computer should start sending print commands with no problems.
You might want to install a sniffer/monitor on this XP machine to see what is happening with its network identification proceedures. Perhaps there is a bad DNS record or some other kind of discovery process is timing out. A monitor like wireshark or network monitor from Microsoft may be able to reveal some additional clues as to what is going on.