I can't do a Remote Assistance session to a Windows XP box from Windows 7
If you need to get a remote assistance session going and you're willing to sidestep the immediate issue with Remote Desktop Connection, I'd suggest trying the free version of TeamViewer (you load the full - but still free - version; she loads the Quick Support version). I know how un-satisfying it can be to not know some why something is broken, but this can get the support going while you work on fixing the issue with RDC.