Your best bet is to invest in a Linksys NSLU2. It is a network attached storage link. You can pick these up at Best Buy for about 75 bucks. It is a device with a web interface and it will also allow you to set up user permissions that allow people to connect via your local home network. No matter what the salesman says, DO NOT invest in the WRT350N. This is a Router / VPN Endpoint / NAS all-in-one device. While this sounds great, the firmware is still a bit buggy to make it a worthwhile investment at $199. Give it a few months and they will iron everything out.
The idea behind the NSLU2 is that there is an embedded Linux OS running which serves up a SAMBA file share. You can search for all these terms if you are curious, but the important thing is it makes your request very easy to fulfill. This doesn't work exactly the way you asked ;-) But this is in fact the correct way to do it.
Once you have the device, you plug its cat5 eth cable into one of the ports on the back of your router. By default the router should automatically assign your NSLU2 an IP address. Keep in mind that this is a DHCP assigned address. Meaning if you turn off your router (or the NSLU2) and another device comes on before the NSLU2, it may receive its old IP address. Thus what you want to do is go into the configuration menu of the NSLU2 (via a web browser, using the IP address it was assigned (which can be found in your router web configuration (you probably will have to look in the manual for your router or its online documentation to find this). If you have a 2wire Home gateway, these are usually set to 192.168.1.254 by default. Linksys routers are usually 192.168.1.1 or 192.168.1.100.
Once you have the IP of the NSLU2 in hand, you will type that into your web browser. This will launch an admin console. From there you will have to tell your NSLU2 to use a particular IP address. I suggest setting it to something like 192.168.1.200 as it is far out of the average users DHCP address pool (Meaning another device on your network will not try to steal the IP address of your NAS (Network Attached Storage) Device.
Once you set the IP address to a static one, then you will now type that address in the web browser when the device restarts. From there, set up the hard drive to work with the NAS system...it will format the drives to work correctly. Note: The NSLU2 formatting will wipe the drive. So it is good to back up the data if you need it first. Once the drive is ready, create a user account and your pretty much done!
Go into "My Computer" and choose Map Network Drive...
In the box that pops up: Enter \\
\. The ip address assigned is whatever you chose or if you used my suggestion, it is 192.168.1.200. The name of the share is whatever you set the main user's folder on the NSLU2 to be called. From there you will be prompted to enter in the user name and password you set up. This might be 'admin' for the username and 'admin' for the password if you didn't change the defaults (refer to the manual for more instructions). Then it should connect and you will have a very cool way to access your files on any computer on your wireless network.
Best Practices:
Be careful about router / NSLU2 security. Make sure your admin interface for your router is password protected and doesn't have the default password. Also make sure you don't leave the NSLU2 admin password at the factory default either.
If you don't, someone could gain access to your wireless network, take a peek in your router config, and they could potententially set up port forwards to exploit things like this. I recommend setting up WAP security on your router or WEP with a REALLY good passphrase. This would be true regardless of whether you were using a Network Attached Storage Device or not. Be one with your router and watch it carefully...it is your one line of defense against the evil lurking out on the internet :-)
The other thing you could do is find an old computer, with like a 1 Ghz processor and at least 512 mb of RAM. Take that and put a base Ubuntu or other easy to configure linux distro and set up a SAMBA file share. This is harder to set up, requires more power to run, but with some work you could make it do everything the NSLU2 NAS device does. If you are unfamiliar with setting up things like this, I would suggest you go with the NSLU2 instead.
I have used one for two years to make my data (music, pics, docs, etc) available to all computers on my network, as long as they provide the username and password. It is a great device and well worth the 80 or so bucks to get one.
As for speed, which one person brought up...thing about it this way...
Average downstream speed from public internet to your router is 3 mbps (with basic DSL / Cable Internet service).
On your local home network, data is exchanged between your router at 54 mbps. Which is 18 times faster than data received from a website! and it is roughly only half as slow as a wired 100 mbps ethernet connection. So lay any speed related issues aside. I have streamed movies over my connection on the NSLU2 from a local network computer and I have even streamed music off of it over the internet from a remote location (requires a port forward in your router for this advanced config for public access to the web admin console).
While people find that it sounds weird, it is actually quite common to have a file server...just not as often in non-commercial environments.
Anyways, I hope this helps.
PS: If you run Vista, you will need to run "secpol.msc" from a run prompt. Then go into Local Policies -> security options and for the policy regarding "Network Security: LAN Manager Authentication Level" change the setting to "Send LM & NTLM - use NTLMv2 session security if negotiated". This will allow your vista computer to communicate with the NSLU2 properly.