I have an XP computer and a VISTA computer. Each connect to internet by a D-Link DI-604 router and a Motorola 5220 cable modem. Each computer is connected to internet separately, not one connected through other.

I would like to setup a LAN so that they can talk to each other.

XP machine also has printer and would like to share printer. What would be easiest way to
Establish LAN. Both computers in the same room. Would USB Bluetooth dongles and a wireless connection easiest. If I put a USB Bluetooth dongle on the printer would I need a print server?

Try these step by step instructions for getting Windows Vista and XP to work together.
Also, if they are both plugged into the same router you already have a physical network between the two, so no issues there. If you have the printer hooked up to one PC already then once you finish with the above steps you can right click on the Printer, select Sharing, and share the printer out.