You might want to research EasyLink. This is a wonderful software program that delivers faxes straight to your email. You can email to a regular fax number, as well (even outside of the US). I've used EasyLink since 2003 and it's one program that I would be absolutely lost without!

The contact information is:

EasyLink Customer Support:

E-mail: support@easylink.com
Web Site: http://www.easylink.com
Phone: 1 800 624 5266 within the U.S.
1 937 264 7000 outside the U.S.
Fax: 1 937 264 7805

In the past I've used WinFax. The phone line was linked to the computer and telephone. One advantage was it worked with Outlook so you could go to your contacts and tell it to dial and it would dial the phone number for you. Also if you get those annoying faxing to your phone line calls, you can have Winfax pick it up and you can get the fax. The downfall was if you were faxing a lot the phone is out of commission unless it is a multiple line phone. I used to send over 200 newsletters that way. Start them Friday before leaving and come in Monday to a report showing what ones went and what failed.

Another option to consider, at least for outgoing documents, is using a scanner to email files, bypassing the fax (and phone charges) completely.

Microsoft has a built in fax service in Windows XP. The Fax service gives you complete faxing capability from Windows XP. You can use the Fax service to send, receive, track, and monitor faxes.
By default, the Fax component is not installed during Windows Setup. To install the Fax component, follow these steps: 1. Click Start, click Control Panel, and then double-click Add or Remove Programs under Pick a category.
2. Click Add/Remove Windows Components to start the Windows Components Wizard.
3. In the Components list, click to select the Fax Services check box, and then click Next. Setup installs the Fax services. If you are prompted, insert the Microsoft Windows XP CD, and then click OK.
4. Click Finish, and then click Close.
Use the "Help and Support" option in the Start Menu to configure this service.

Is this Windows XP Professional or the regular Windows XP which contains the fax capability?

This is available with either edition, but you will need to go about the initial set up differently. To use the Fax Service with Windows XP Home Edition, you will have to use your CD to install this option. With the Pro version, you just "add" the option from the add/remove programs. http://support.microsoft.com will contain just about everything you will need to know about their products. Use the "Search Support" box in the upper right corner to search for the topic that most closely relates to your question.