So in case there are any other people left in the world who are still running XP and are struggling to connect a Nokia Lumia 520:If these are not present, install Service Pack 3 and Windows Media Player 11.Restart PCGo to the site below and follow the instructions for solution #3 on the page (copied below also)Update your Windows Phone 8 driverIf Windows Device Manager indicates a device problem or if the driver version of Windows Phone 8 that's installed isn't the current version, update the driver. reboot computer and it should be okay now. you have to access device manager via My Computer, change its status from Camera to Portable MTP Device or something like that, and then download and install it + set it manually as a driver to this (Portable MTP Device - your Lumia) device.
I've also had problem with it on Win XP SP3 + WMP 10. You can try some suggestion of the following forum users.
