Hi, Lucy (we're both here from the Quilting forum!) - I have the same machine you do, and PE Design 2.5. I also have Windows XP and I have never had any trouble. I occasionally encounter an error in reading a file, but it's usually because it was created in a higher version of PED and the older version can't read it.

I think up to PE Design 4.something the program used the same reader/writer box and card that you have, but the newer versions have a different box and card, so if you want to upgrade, beware of buying those $25 versions on EBay - I've heard they are pirated, and they don't come with the box and card. I'd get the upgrade through a Brother dealer who will supply the new box and card. It's going to cost you a few hundred bucks if you decide to do it!

Donna