Resolution: When installing GridServer Engines on machines running Windows XP Service Pack 2, it is important to note that by default, Service Pack 2 enables the Windows Firewall, which will automatically block any incoming traffic.
To make sure your Engine can properly communicate, the inbound port for the Engine's File Server must be open to traffic. By default, this port is set to 27159 in the Engine Configuration page. Configure your Windows Firewall to enable use of this port by your Driver machines.