I did jump a few steps.
Bert is right on the money with his comments as usual and much more detailed. Yes, server is the name of whatever the main machine is. The accounts should have the same name and password on both machines.
I will have to give credit to the server side, it was easier to do with a server/client system since the logins and passwords are all centrally controlled. I have 2 offices, one P2P one Server.
Workgroup is the P2P default for XP, (I think Vista) and Win7 machines although a few are MSHOME.