A VPN is a Virtual Private Connection used to establish a connectivity either between two remote sites (known as sitie to site VPN) using the exsisting internet connectivity, without having a dedicated lease line between two remote sites or Virtrual connection for a remote worker (access VPN) to access the Companys network resources using a VPN client software.
VPN encrypts the packet before transmitting the data over the internet. In order to configure a VPN you need a router with the IOS capable of supporting VPN, or a PIX /ASA firewalls.
About configuration, have a look a these articles:
<a href=”http://www.windowsecurity.com/articles/Configure-VPN-Connection-Windows-XP.html”>Configure a VPN Connection Using Windows XP</a>
<a href=”http://support.microsoft.com/kb/305550″>How to configure a VPN connection to your corporate network in Windows XP Professional</a>