Windows XP home come with a built in firewall. It’s disabled by default.

If you trust windows version of a firewall go ahead and enable it. (I’m not going to tell you how to turn it on, yet)

What are the alternatives?
ZoneAlarm (ZA) from Zone Labs Is one alternative that can be used. It comes in different versions from the free for home users to the Enterprise version for large companies. ZA is a software-based firewall and you download, install and configure it on your computer. Configuring ZA can be difficult for novice and casual users but again use Google to search for solutions and read the tutorial.
Listing of Free firewalls for Win.

Hardware firewall comes in many versions and is sometimes known as a security appliance. Dedicated firewalls like the Cisco PIX 500 series are for the most part used in larger corporations due to initial cost.

For home you can combine the FW / security appliance with a router to secure your home network. A couple of solutions like: (Quotes from the different website links)

If you don’t feel like using any of the methods mentioned here at least turn the XP firewall on.
(Instructions copied from the windows help file)

• To open Network Connections, click Start, click Control Panel, and then double-click Network Connections.
• Click the Dial-up, LAN or High-Speed Internet connection that you want to protect, and then, under Network Tasks, click Change settings of this connection.
• On the Advanced tab, under Internet Connection Firewall, select one of the following:
• To enable Internet Connection Firewall (ICF), select the Protect my computer and network by limiting or preventing access to this computer from the Internet check box.
• To disable Internet Connection Firewall, clear the Protect my computer and network by limiting or preventing access to this computer from the Internet check box.

Windows firewall are better than no firewall.
A computer without a firewall is like crashing your car without a seatbelt. A computer with a firewall is the same accident while using the seatbelt. In both instances you may be hurt but without the seatbelt you will most likely be hurt worse.

Disclaimer: be carfull when changing setting on your computer. If you are not sure what to do get help from someone who know or use Google to search for Firewall tutorial

open sesame

when using firewall take a time to play with it, configure some ports and application rules. for another security try some packet sniffers to check if there are hidden application that try bypass your firewall, some of modern spywarez, virii, and trojan neglect the firewall. it means your security is useless if not configured properly.

r3d have a very good point when it comes to play with the firewall.

By the way you can stop reading now, I'm just repeating r3d in a longwinded way:)

A software firewall is a program you use to control what is going on or to prevent an action from occurring. It's better to be proactive that reactive. Because it's software you can tweak it and get different behavior. I'm using ZA (free version) for my examples. There are a lot of other firewalls out there but I have 'some' knowledge when it comes to this one.
You:

• -install Mozilla Firefox and the firewall pops up and ask if allow access to the internet, grant yes but don’t check the “Remember this setting” the first time it accesses the Internet.
• -install a download enhance utility Lets call it SpeedDown “pun intended”) ample.
• -now pop the firewall asking you to grant access to AdSense. AdSense where did that come from? It was installed behind your back by SpeedDown If you are like most of us you don’t read the EULA (end user license agreement) and somewhere in that EULA you agreed to install that program and maybe a couple of more. (the firewall just paid for itself by blocking this) For this example check the “Remember this setting” and click deny.
• -Install a program that are used on this computer only, (I use emulation program to access a *nix computer) and after installing the program it starts broadcasting to the Internet. Deny with the check box.

I used 4 examples here but every time you install or use a program you control what it’s doing and where it’s going by updating the firewall rules. It takes some time to figure out, if your internet access stops working and you think all the settings are correct. Try deleting all the programs you gave access to and start all over. (not a pleasant task) check your trusted zone, maybe your IP changed on the modem and now your modem are not in the trusted zone anymore. (I have seen that happen)

Following are just me ranting and broadening the scope, some examples and testing:(some of this may be a little repetitious

To control what is going on in your computer you have to have control, log files give you that control. You can use the log file to see who tried to scan your computer and from where the scan occurred. Log files and the interpretation of them is a whole other subject so I'm stopping here.

With the firewall you can set trusted and blocked IP addresses as well as program access. With the firewall running, you start a new program. If it's a browser and you expect it to access the internet you give it permission. I normally grant per session access the first time so I can see if it behaves. Now I'm done using the new program, 'nice' behaving programs shut down and stay quiet until the next time you use them. Others try to call home and broadcast that they are shut down. This is unacceptable behavior. Another issue are when you install a program that are not meant to be used for the internet and the same program opens a port and broadcasts to the internet that they are installed and ready to go. That is what registration is for, I want control over my programs and I decide when or if I register that software.

A lot of the so-called 'FREE' ware is not free. You pay by adding software that are bundled into the program you downloaded. Some them install in the background and start accessing the internet or tracking what you do and where you went on the net. From all the collected data they can target advertising to you and your surfing style. This can be good... "Not in my book". Another issue are malformed web-sites that host drive by downloads. You go on one of those sites and your computer star acting funny because malware is downloaded. Again a different subject... I get off track tonight) See how different spyware removers stack up. or Rouge spyware removers

Back to firewall, now you have 'played' with it (in a nice way I hope), how do you test your settings and see what you tell the world about you and your computer?

There are several ways to do this, "Ask a hacker to hack you"... I'm joking, OK! or go to a site that can help you test your firewall. One such place is GRC.com also known as Steve Gibson Research(you may get a splash page, just click on the link for 'ShieldsUP'. Scroll down to ShieldsUP and read the instructions there. You can use it to test your ports and other security issues. After you are done with those tests take the "Leak Test" to see if your computer leaks back out to the Internet. For the Leak Test you have to download a small program. read the instructions. If your firewall pops up a warning and asks for permission for this program to access the internet say "NO". to say yes defeats the purpose of the firewall, if you don't get any warnings and you connected to the server you will get a message.

The steps of testing firewalls are not limited to XP home, this can be used with other OS also.

Nils