Yup, your modem can work as the fax machine. Just make sure you have the telephone cable hooked up to it.
Then what you do is open up the document that you want to fax, go to PRINT, then from the drop down menu where you can select the name of the printer, select "Fax" instead.
I usually fax shit from Adobe Photoshop, but you can use pretty much any program, as long as it has a print menu.
I'm pretty sure this shit comes standard with XP/Vista, my comp always had it, I didn't have to install anything.