First, download Windows XP Service pack 2 from Microsoft's website. Then follow the instruction on this website to create the bootable CD. The "i386" folder that the instructions refer to are on the second VirtualPC CD. Just copy that folder to the location indicated in the instructions. Be sure to follow the instructions for "slipstreaming" Service Pack 2.
When finished, you'll have a bootable XP installation CD that will work with the license code provided with Virtual PC.
[robg adds: I can't test this one...]

