How do I Send/Receive Faxes in Windows XP?

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There are a number of advantages to moving to a Windows XP-based fax system, the main one being no wasted paper. No need to print documents before faxing them. You can read, save, delete, or attach incoming faxes to e-mail—all without using a single piece of paper. Of course, you can print them too.

Microsoft has provided a nice article describing what is need to FAX in Windows XP.
http://www.microsoft.com/windowsxp/using/setup/learnmore/crawford_02october21.mspx

As well as in Vista (Business, Enterprise, and Ultimate only).
http://www.windowshelp.microsoft.com/Windows/en-US/Help/488ac4fb-7436-4a03-bb70-6ded839dd3c21033.mspx