Do you see that error when your iPhone is connected to Wi-Fi or 3G/EDGE?
Usually that error is due to router configuration issues, but I agree that it doesn't look like that's the problem in this case.
The other thing that could cause that error is firewall software on the XP SP3 computer. Please disable any firewall/security software on that computer temporarily to see if iCam start working. If it does, we can configure the firewall so that it works with iCam.