I created a 16 GB partition on my MacBook Pro, SilverSurfer, and installed Windows XP, slipstreamed to Service Pack 2 (SP 2). I could have saved myself some trouble by installing from a version of Windows XP that was slipstreamed to SP 3, but I didn't have one handy. Because, when I tried to install SP 3, after a successful installation of Windows XP, I got an "Out of Disk Space" error message that said I needed only 4 MB more.
Yet, I had over 12 GB (not MB) of free space. It turns out that the Boot Camp installer that you run in Windows after the installation does not create a required registry key, BootDir. The update to Boot Camp for Windows XP from Apple (v. 2.1) makes the fix, and after downloading and installing the update from Apple, SP3 installed correctly.