Simple file sharing means that when you go to a property page of a folder, you will not see the Security and Sharing tabs. This is the default for Windows XP if the machine is not part of a domain.
This can be problematic, because you cannot add specific users and groups to access a folder. Case in point: if you are doing IIS and ASP.NET development, sometimes you need to add aspnet account to access the folder where IIS virtual directory points to. With the default simple file sharing under XP, you cannot do that. I learned this while doing some dnn work on a Windows XP machine.
Disabling simple file sharing is simple:
1. Open Windows Explorer;
2. Tools -> Folder Options -> View tab;
3. Uncheck User simple file sharing (Recommended) box.