To be honest the very new machine - its not necessary to connect to the network, as the iMac G3 will connect to the internet - just as they promised at the time. I was pretty impressed a machine that old could do that, out the box.Have you set the sharing on both machines ? In the Files sharing ctrl panel. Then in the Appletalk ctrl panel, set it to ethernet
Also set the volumes or folder you want to share , by displaying the Infos and go to "Sharing" tab, then set it to "share this Folder/Volume and content" .
Shared volumes should then be visible in the Chooser.
Highest Mac OSX version to connect to OS9 with AFP would be OSX 10.5 Leopard (And Maybe 10.6 SL, never tried…), OS9 will also see it (connect with IP).
So a year old Mac with more recent OSX version will not work. Or it will , but with another protocol like FTP.
Very good site about all that here :
http://applefool.com/se30/
Edit:G4MDD fast
So in theory then the iMac could be fitted with a lowly version of OS X and be able to see the Classic and also see the new machine?