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A reboot of system #2 into Win7 RC results in a different world all together. Opening Explorer I see Libraries (what are they?), Homegroup (what is this?) and Network. Network lists the external drive, system #1 and system #2. Selecting Network I get an error box titled "Network Error" with message 'Windows cannot access \external - details: error code 0x80070035 The network path was not found. Click Diagnose > Windows Network Diagnostics > result > Troubleshooting couldn't identify the problem. Close selected.
I had this issue. It may not work for everyone, but in my situation it did. I created an account on all the PC's...each one the same as my account used on Win 7=same user name; same password. Now when I would try to copy files etc it would actually ask for a username and password. I enter it in, and then I have unfiltered access. YMMV.
Starting with Vista, Microsoft uses a different method to browse the network. It no longer uses NetBios, but uses something called Link-Layer Topology Discovery Mapper. This service identifies not only shares, but devices as well. NetBios on XP will identify Work groups, but Vista (and probably Win7) does not seem to supply this information. Therefore, you must ensure that all machines on the network belong to the same Work Group. HomeGroup is the network group that Microsoft sets up by default.J.A. Coutts
I just checked and NetBIos is not installed on either of my systems as a protocol so I would have to rule that out as being used for the network. When I start the #2 system in Win7 it does recognize the workgroup I have assigned so that part seems to be working ok, its access that is the problem.