I solved my problem.
I downloaded the following ipks:http://my-zaurus.narod.ru/bluetooth.html
The problem was a combination of IP settings both on the XP system and the C1000.
I do not believe you can share a wifi connection on XP. Atleast, I could not get Internet connection sharing to work with it. I set up sharing on my wired card on the XP machine. You may see a dialog for the internet connection sharing that allows you to choose which networks share the wired XP card. If you do select the bluetooth network. In my case it did not give me a choice.
I then went back to the Bluetooth network setting under network connections on the XP box. I set a fixed IP address of 192.168.129.1, subnet mask of 255.255.255.0. Then I went to the Zaurus network settings. Select new network PAN-TCP/IP. Go to IP settings and set IP address of 192.168.129.201, subnet mask 255.255.255.0. This is the key point in for me: gateway of 192.168.129.1 and first DNS of 192.168.129.1. Both of these should match whatever IP address you set for the XP Bluetooth network. Hit OK to get out of the network settings. Hit Connect. The globe in the tool bar should appear to be connecting. I was prompted to accept the connection the XP box. Fire up Netfront or you web browser of choice.....
It is just as fast as my Wifi card in the same Zaurus. I was really suprised.
I hope that helps someone.