What you have is a full XP CD it seems - the best disk you can have.
Fist off, back up your data - office documents, photos, address books, bookmrks and so on - everything that you need.
When that is copied to a CD / external drive, put the XP CD in the drive and restart.
You should get the option "press any key to boot from CD".
Do this and you will get an option to repair XP - follow that option and you should be ok.
That's the briefest of outlines - take a look at How to Perform a Windows XP Repair Install
XP Clean Install