The instructions I have use Nero, but if you have another CD burning program let me know what it is and I will try to get the instructions.
Create Folders
First open windows explorer and create a new folder in the C drive. If you do it right at c:\ then it will make the other steps later, easier. Name it XPinstall. Now go into that folder and create a 5 new folders. They are in turn, XP, SP3, and bootsect. Next follow the steps below.
Show Hidden Files
1. Double-click on the My Computer icon.
2. Select the Tools menu and click Folder Options.
3. After the new window appears select the View tab.
4. Put a checkmark in the checkbox labeled Display the contents of system folders.
5. Under the Hidden files and folders section select the radio button labeled Show hidden files and folders.
6. Remove the checkmark from the checkbox labeled Hide file extensions for known file types.
7. Remove the checkmark from the checkbox labeled Hide protected operating system files.
8. Press the Apply button and then the OK button and close My Computer.
9. Now your computer is configured to show all hidden files.
Copy XP and XP SP3
Now you need to stick your Windows XP installation disk into the disk drives and copy everything into the XP folder created above.
Now you need to download the Windows XP SP3 installation file.
http://www.microsoft.com/DownLoads/details.aspx?FamilyID=5b33b5a8-5e76-401f-be08-1e1555d4f3d4&displaylang=en%22 Save it to the SP3 folder created above. Unzip the SP3 file
Open that file with a Zip utility. I use PowerArchiver, but WinZip or any of the others should do as well. Extract all the files to the SP3 folder created above. Or you can copy the file downloaded to the SP3 folder and then open a command prompt and type in cd c:\xpinstall\sp3 and then hit enter and that location should be displayed. Now type in windowsxp-kb936929-sp3-x86-enu.exe -x:c:\xpinstall\sp3 and that will extract the files. Now either move the downloaded SP3 file or delete it.
Slipstream SP3 into the Installer Files
If you don't have a command prompt running, start one. Type into it, cd c:\XPinstall\sp3\i386\update and then type into into it update.exe /integrate:c:\XPinstall\xp
Make Installation Bootable
First download IsoBuster,
http://www.isobuster.com/isobusterdownload.phpInstall it and run it and select Free func. Only from the registration window. In the left-side tree view, select Bootable Disc. When you do so, the right side will change and display just a few files. One will be named Microsoft Corporation.img (or similar; it will be named something.img): This is the file you need to extract. To do so, right-click and choose Extract Microsoft Corporation.img . When ISOBuster prompts you, choose to download it to the C:\xpinstall\sp3 folder.
Burn to a CD
These instructions are for Nero Burning ROM Version 8. Other utilities should be similar.
1. Start Nero Burning ROM.
2. Burning ROM will start with a New Compilation window open.
3. Select CD-ROM (Boot) from the left side.
4. Then, in the source section, make sure Image file is selected and then click the Browse button.
5. Navigate to C:\xpinstall\sp3 and then drop down the list box that's currently set to Boot-Image-Files (*IMA) and choose All Files (*.*). The select Microsoft Corporation.img and click OK.
6. Then, in the Advanced section of the New Compilation window, make sure Enable expert settings (for advanced users only!) is selected and choose No Emulation as Kind of Emulation.
7. Ensure that 07C0 is the value under Load segment of sectors (hex!).
8. Change the Number of loaded sectors value from 1 to 4.
9. Click the New button to close the New Compilation window.
10. The normal Burning ROM UI will appear with a blank compilation on the left and a tree view of your PC's file system on the right.
11. Using the File Browser tab on the right side, navigate to C:\xpinstall\xp . Then, drag the entire contents of this folder over to the left side of the window. This should take only a few seconds.
12. Change the name of the CD on the left side to something like XPSP3Install .
13. Remove your XP Setup CD and then click the Burn button in the Burning ROM toolbar. The Burn Compilation window will appear, as shown below. Check the option titled Finalize disc (No further writing possible!) and then click Burn. Burning ROM will prompt you to insert a blank disc. Any CD-R or CD-RW will do.