I ended up contacting HP thru the 800 number, they took control of the computer and tried all of the same things I did and they came up with the solution that this particular printer does not work thru the network with windows XP. It will only work with Windows XP if it is plugged into the USB Cable. even though if all you do is put the disk in that came with the printer or run the install program from the webiste and it never gets to the point to actually look for the printer.
Their suggestion is to download and install windows 7. I will give that a try in a couple of weeks when I have more time.
Thanks