|If you are using SATA harddrives, the original installation cd for Windows XP without SP3 will not recognize your harddrive.|
Therefore, you have to either install customized driver by pressing F6 key during installation, or you have to use an installation CD for Windows XP, which already includes SP3.
Note: The so called slipstreamed installation CD for Windows XP must be the same version as the one, you already have.
If your existing version is Windows XP Home Edition, the slipstreamed version must also be Windows XP Home Edition, including SP3. Otherwise, your activation key will not work.
Here you will find further informations on howto build a slipstreamed installation CD for Windows XP including SP3.