1) In your response to No. 1, are you saying that a hacker would not have access beyond the shared files if my password was compromised?
Allow me to post an analogy: would you hand the end of a USB cable into your disk array to a hacker?
That's basically what you're doing here.
Sure, it might well be secure. We can all hope it is secure.
Given the critical and central nature of the file server within an operating system, I've seldom chosen to expose the file server across a network; I really don't want to find out how far somebody can get. And I really don't want some gremlin tossing bogus packets at my file server.
I prefer use VPNs where that is an option; some sort of a secure connection. (If you want to scare yourself, go look for some details on the DEFCON Wall Of Sheep. Based on what I see in my log files, some folks really are out to get you, too.)
I would love to use VPN (I have Leopard Server as well) but after a year of trying I have not been able to get shared files to show up in a Windows client (Mac clients work fine) so I am giving up and going with a less secure (but hopefully easier) access, since the files I am sharing are not sensitive info.
Then ask for help with that. Consider using Filezilla via sftp, for instance. Or a Windows WebDAV client.
The Internet is a very unforgiving place. If you do decide to drop your server security, then keep your backups current as that'll be a likely recovery path here should your server become breached.
2) I cannot seem to find a place that accepts an SMB remote address in Windows XP (it only allows me to make a connection with VPN or FTP). Any ideas where I would do this?
Usually mapping to a network drive, IIRC. But best to go ask Microsoft Windows questions in a Windows forum or a Microsoft forum. Or look to replace or upgrade the Windows box, if it's not doing what you need.