I have an Ubuntu Live CD, but how does booting into it show my computer being compatible. Yea if it loads into it, works!, but doesn't show if all software will work great, wireless, resolutions etc etc etc..
The three main areas to check with compatibility are graphics, sound and networking. You have an nVidia card, so that is ok. The sound is done via intel-hda alsa drivers [I have the same onboard sound]. I am not sure with the wireless card, you should be able to get it to work, I am not sure if it would work out of box.
Yes, it would work perfectly, hell the Live CD does not even touch Windows XP in any way shape or form. Why would a Linux distro want to go rooting through an NTFS partition looking for the registry to read the resolution of your screen when your screen using DPMS will just tell Ubuntu what the optimal resolution is .
BTW, if you install Ubuntu, make sure to install the nvidia drivers as well so you get 3d hardware acceleration.
Have you ever thought about dual booting.
As you allready have XP installed you can use the live CD to do an install and it will automatically partition your hard drive for you, if you have a spare hard drive you can also load it onto that and GRUB will take care of which OS you want to load.
If you like what you see with UBUNTU, try Linux Mint, it is UBUNTU with the video & audio codecs allready loaded and the Nvidia or ATI graphics driv ers can be loaded with two clicks in the GUI through Envy.