thats weird... so ur definately connected to the xbox? (just checking)... cause it seems weird it will error out constantly, yet your connected to the xbox.
try refreshing the xbox side of things to make sure your seeing the most upto date view of files from the xbox.
then try transferring a file to the pc just to see if that works.... or did u say u cant transfer from xbox to pc or pc to xbox already?
but if your using a router right now... u could always buy a crossover cable and use that cause im almost postive that should work since nothing can interfere with it since it's directly connected to the pc and xbox that way... but using that u MUST setup static ip's on BOTH xbox and pc.
also it might not hurt to format the xbox hard drive using the X3 config live itself... see if that helps at all... u should be able to just format that 200GB hard drive with ALL space on F (so u have NO g drive)... most people would want it this way anyways.