When I get to the point where the add printer wizard asks for the location on the network it then asks for the location of the driver. I point it to the driver but it then says "Windows cannot locate a suitable driver. Please contact your administrator". This is the right location for the driver and the driver works (I went back to basics and installed the driver while connected via usb to the printer and it works fine).
I have the exact same system at home (printer connected to a win 7 PC via usb and a wireless router plus an XP laptop). I go through the same procedure and it works first time. A very easy process.