The process is called "slipstreaming" and is documented on a number of websites (just search for the terms
"windows xp service pack slipstream". The conventional method requires some technical knowledge and it is only for slipstreaming. It is well described on these two pages (you can use any of them):
1.
Paul Thurrott's SuperSite for Windows
2.
HelpWithWindows.com
There's an easier and more sophisticated method: using
nLite. This tiny piece of freeware allows you to slipstream service packs into XP install CD in an effortless way, remove unwanted components from the install CD, preconfigure some options for the installation process, etc.
PS: there's one thing that most slipstreaming guides do not mention. In the step when you use ISOBuster (or any other tool) to extract the boot image from the original XP install CD, you have to extract the BootCatalog.cat file as well and not just the "Microsoft Corporation.img"!
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