The laptop has a hard drive in it but it is blank. XP is 'locked' to the PC it was originally activated on.
It is saying that if you get a copy of XP Pro you can use tat license number to activate it.
I notice that the spec says 'operating system' included but the last part say it needs an install.
External CD or DVD rom drives are available of course but it might be worth looking on ebay for a DVD drive for that particular model. I have a DVD drive to replace the CD drive in my laptop that was about £15.
The PC will definitely need more RAM.
It is going to be quite expensive to upgrade the laptop (RAM, OS, DVD drive)so I hope you got it for a good price.