Thanks guys, was up till 4:30am fooling with this and I've finally got it, somehow. Took everything off both computers and started over again fresh. All I can relate to is that this has really changed since I last did it with XP and a Linux machine. Seams even the router set-up has changed.
To clarify, machine 1 is Win7 with one physical drive. Drive C. Machine 2 is Win7 with two physical drives, C and E. OS is on C.
Here's the reason for the network. Machine 1 is my everyday use machine,. Machine 2 is an old one that has all my iTunes on it. The iTunes program is on C and all files are on E. When I got the new computer I tried moving iTunes to it which didn't work. So the thought was to network the 2 together which also doesn't seem to work. I can find the iTunes program and files but I can't open any thru the network.
So all this time and work and I can't do what I wanted to do.