I'm looking for something like VNC, but with some extra features:
Some extra notes: My friend lives far away, and we are using WinXP.
When we work with clients on support calls, we use GoToMeeting. For normal pair programming, we just sit next to each other.
Coda for OS X has a great feature for this - http://www.panic.com/coda/
It supports most popular languages and is pretty snappy.
Hard to beat good old NetMeeting based on the requirements you listed.
Just came across SharedView based on a post by Scott Hanselman. I've never used it, but might be worth a look for your needs.
If you program over a SSH connection in a terminal (for example with VIM) a good solution is to use screen. User 1 logs in with the same user as user 2; User 1 start screen (by typing in "screen" ;)) and user 2 types in "screen -x". Now you are both sharing the same screen and you can work together in the shell, both controlling the input. Offcourse this doesn't support VNC features but it works very quick for programming.
It's more geared for gamers, but you'd be surprised how practical Teamspeak can be for this.
Check out Cola for Eclipse which comes with ECF. Amazing stuff. I tried it with a coworker and it works great. http://www.vimeo.com/1195398?pg=embed&sec=1195398 See also the other ECF stuff here: http://www.eclipse.org/ecf/
I've used the Adobe Connect commercial offering with good results. It is Flash-based in the browser so it works across operating systems.
EtherPad was bought by Google and is not longer accepting new pads.
Just found a new site that also might do this: EtherPad. I'm not affiliated, but it's a pretty cool AJAX app that let's multiple people do real-time editing. Seems like it would be particularly useful for pair programming, although it's got a ways to go as an editor (syntax highlighting for languages besides JavaScript, for instance) before it's really useful. But if you want just straight text editing, it's not bad.