1. Copy the XP CD to C:\XPCD
2. Copy the SP1 to C:\
3. Rename it to sp1
4. Go to Start>Run and type C:\sp1.exe -x
5. Choose the location C:\sp1 for the Extracting
6. After the extracting go to Start>Run and type
and that's all, Now you got an updated XP ready to install burn it and install.