App sharing not working!?

[kc]

I'm trying to get Application Sharing going with a friend,
but after accepting the request, his sharing status/dialog
box thing just says "waiting", while I get "connecting" &
then:

"The network or the computer that you are trying to
contact is experiencing a problem. Try again later.

Error 0x80ee000c SIP Transaction timed out"

I CAN get it going with other friends, but he can't.
We're both using XP, Windows Messenger v4.7, both not
running any firewall software.

What could be causing this?

Thanks