If you need to reinstall Windows XP on a system, it is very time consuming to have to install the operating system and then, when that process is completed, install the latest service pack and other updates for the operating system. The process is certainly much faster, if the XP installation CD you have on hand already incorporates the latest service pack. But chances are that installation CD is for the original version of XP before any service pack was released, or incoporates a prior service pack version, e.g. the installation CD may be for Windows XP Professional Service Pack 2, while Service Pack 3 is the current service pack version.
There is a way to create a new installation CD that incorporates the latest service pack into the version that came on your installation CD. The process is called "slipstreaming". There are various tools to help you create a slipstream disc; nLite, is one such tool. For instructions on how to use nLite for such a purpose, see Slipstreaming XP SP 3 with nLite.