OBJECTIVES: I. Determine whether morbidity can be reduced while preserving survival by substituting cyclophosphamide for ifosfamide in adjuvant combination chemotherapy in standard-risk patients with Ewing's sarcoma or peripheral neuroectodermal tumor (PNET). II. Determine whether survival is improved without unacceptable toxicity for high-risk patients with Ewing's sarcoma or PNET by the addition of etoposide to the VAIA regimen (vincristine/doxorubicin/ifosfamide/dactinomycin). III. Evaluate the impact of surgery and conventional vs. hyperfractionated radiotherapy (definitive and adjuvant) on local control, overall survival, and morbidity in these patients. IV. Relate treatment outcome with patient characteristics, histologic subtype at diagnosis, and histologic response to neoadjuvant treatment. V. Evaluate prospectively ifosfamide-induced nephrotoxicity and doxorubicin-induced cardiotoxicity.