yes u need a modem, thats what dials out to the fax machines u are sending to… i am using xp also. when you set up a fax select new fax, fill out the address book with all of the business faxes you want to send to, then it asks you to pick a template for your fax or use an attached file for your fax. i created mine to say daily specials on top with my store name an phone number. the body of the fax is what i change each day. fill out your content and click finish and it should start sending.