I have a cat5 cable with rj45 connector on each end which i thought was all i needed but apparently not -true?
Yeah, you'd need a Cat5 Crossover, not the standard Cat5. (I think it's the Orange and Green pairs that need to be swapped to make a Cat5 10-Base-T crossed.)
I know there are "crossover cables" but they apperently 2 cat5 rj45 cables and a hub is better
Well, the hub gives you the option of adding more machines later. Other than that, for 10-Base-T operation, you'll notice no difference. (I've had problems running at 100-Base-TX with a crossover cable, but your X-SurfII can only support 10-base-T, so that wouldn't be an issue.)