First of all with one user license you can only install XP on one computer. You then register that copy.
It is likely that the disk you have may be a restore disk. (You do not say what it is). If so, this will only restore to a factory setting, the computer for which it was intended.
If your friend purchases a copy of XP Home and he has Me installed, he only needs XP Home upgrade.
If you clean install XP, it will ask you to insert your original copy of Me for verification.