Of course it goes without saying that the two computers are networked together.
First we set hardware KVM switch. In this situation I have for each computer a separate monitor (some could be a multi-monitor systems as on the picture above). That means I use the KVM switch only for keyboard and mouse, I will not need to switch video. Investing in extra monitor is the best idea, becasue no matter what KVM switch I tried, they all blurred the video signal to some extent, even just little bit, but still annoying.
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KVM switch (without plugged video) will allow us to use one keyboard and one mouse to control one or the other computer. The KVM switch has usually a hotkey that will switch between the two computers while still behaving as if keyboard and mouse is present for the other (so OS doesn't freak out). In my case the hotkey switch is pressing CTRL key fast twice, but this vary from brand to brand.
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The second layer is a Software KVM or KM switch. This will allow a seamless mouse and keyboard transition from one computer to another via network connection. You simply move the mouse cursor to the edge of your monitor (or multi-monitors) and it will automatically transfer control to the other computer - no need to press any hotkeys. The illusion is as if you have one big multi-monitor system (except of course you cannot move program window from one computer to another). Also software KM switch usually handles the copy and paste between two computers so the illusion of one system is pretty good.
There are couple of commercial and free software KM switches.
A free open source KM tool which is incidentaly also multiplatform is Synergy.
It did worked pretty well, following the instructions on the web, however on my 3+1 extended monitor setup the cursor did sometimes get stuck for a brief moment on the monitor edge. I suspect it has something to do with setting application focus that is not really prepared for multimonitor situation on the server machine (but works fine, just the occassional mouse stutter on the edges between the two computers). I guess the source code would need to be fixed, but it is free and for most of the time it worked fine (and very fast).
I mentioned MaxiVista on the previous page which is a commercial software with main task to extend the main desktop to a spare computer over the network (and so use its screen as an extension of your primary desktop) but a side function is that you can switch it to a Keyboard/Mouse mode where it works like the free Synergy. A good thing is that you can switch between these modes on the fly - that means you can use the setup above as a 4 monitor extended desktop of computer 1 and then when needed switch to a 3+1 seamless KM. The bad thing is that the KM mode seems to have some sort of very short lag - not much noticable, but when compared with Synergy, you can feel that the mouse movement is different. There are also few other commercial software for this task if the Synergy doesn't work or gets sticky.
You may ask why we need two KM switches, one software, one hardware - for a simple reason, software KM switch works seamlesly which is very convenient and give you illusion of one big desktop, but you need both computers running. If you switch ON only one computer, the client which has no keyboard/mouse plugged in, you are out of luck. Here the hardware KM switch come to the resue! The same if your network gets cranky.
The third layer is a shared disk space. We know that Windows offer a simple folder/drive sharing across workgroup network and this can be used as a no cost solution. However as with other things related to workgroup networking, some days it doesn't work at all - you don't see the other computer and you don't know why because the network seems to run fine.
I found out over a period of time that a network disk NetDisk from Ximeta works far more reliably and securely. You plug it directly to your network hub or router, install the supplied drivers on all computers, register the disk with its ID and it appears as just another drive. It is also secure - it uses a key ID that is printed on the drive case. Nobody outside can connect or even see the disk if he doesn't know the HW ID. As a side note - if you have HP computer with Windows Media Center then you will have trouble installing the Ximeta drivers (not a Ximeta fault) unless you apply a hotfix KB888321.EXE from Microsoft. (it will be part of SP3, right now it is a hotfix)
What I found most appealing about Ximeta Netdisk is the fact that they internally use an excellent Samsung Hard-drive (at least the models I have). It works reliably 24/7 and while I burned (or probably cooked) to death so far about 4 external Maxtor drives, these Samsung works without single problem or overheating.
Using shared networked drive over 100 network is reasonably fast. It is not as fast as direct Firewire or USB2.0 connection, but it is fast enough so you can watch a video from the network drives without hiccups.
So what we created is a true multi-tasking desktop where we blurred edges of the two computers involved using network discs and hardware/software KM combination. Given the fact that today new computers are selling as dual core, we have now 4 processors and in case of 3D rendering we can actually use the other computer as a network rendering clients which will work together as 4 rendering nodes.
And of course if your computers are XP PRO or XP Media Center you can still use Remote Desktop and log on to any (or both at the same time) of the computer from your notebook over Wi-Fi (or wired) network. This way you can work on the desktops from any place of your home or even across the internet (if you manage to configure your router firewall to let the data out, which is not always easy). A current RD clients in windows support working with remote screen sizes up to 1600x1200 without any lag over the Wi-Fi g nettwork. The next MS Vista had increased this size so you can use a laptop with 1920x1200 wide screen in full screen. Again no lag or any hiccups over Wi-fi "g". You will easily forget you are on a remote desktop. (If you search google you can find a way how to unofficially transport the remote desktop client files from Vista beta to your current XP so you can run on 1920x1200 even today if you are impatient, but I think Vista is coming very soon anyway)