Endless Paradigm

It will work.

You may stuff the CD-RW up (as in, no longer re-writable) but it'll work.

theres also a portable version of xp (just basically the essentials taken from your own copy of xp) - i can't remember where i seen it but i was going to make it boot from a flash disk however my system wouldnt recognise the flash drive. so yes it can be done.
however i don't think it is the ideal solution for someone who desperatly needs xp. your best bet is loan him your install disk, assuming he has a key - if he doesn't then you can't legally give him it - even your own copy on a cd-r. sorry to be a boar because i know noone actually cares if you have a copied xp but i like to be carefull myself.

^ Bart's PE?

Making a backup of XP is easy, I done it lots.
Simply copying and pasting the files from the xp disk won't work, it won't be bootable that way. (Although I believe you can use a Win boot floppy and type "SETUP")
What you need to do is use a prog like Alcohol or UltraISO and make an image of the disk.
Then burn that image to disk.
Simple as that.

Forgot to mention, I use/reccomend nLite. Be careful with that one though, don't get carried away...

Hmm nLite - I've heard of it.  How does it compare to XPLite? (what I've been using)

Well, XPLite doesn't work on XP64, unfortunately...

it works i jus tried it thanks guys also zinga is XPlite anygood because my cousins computer is realy crappy and it runs xp but realy slowly so i said i will install XPlite for her