There is no such thing as a XP Machine or a Vista machine or a Linux machine. It is either a PC or it is not. That is the extent of that.
I am not saying you should set the hard drive to boot first. I am saying that it is bypassing the CD Drive completely and trying to boot from the hard drive.
So simply put is the XP CD Pre SP2 or Post SP2. Meaning is it a disk with SP2 or not.