What hard drive set up do you have, is there somewhere you can back up all important data?
I'd advise a fresh install of xp (Unless it’s an upgrade disk?), simply boot from the CD then delete and select a partition/hard drive (where 2000 is) to install the new OS on, XP will format the selected space to install itself (ALWAYS FORMAT USING NTFS FILE SYSTEM). You also have the option to partition your hard drives to how you want, remember making a new partition requires a format too.
I have 10 GB partitioned as a "system" drive for xp to install on if anything ever goes wrong I know most of my programs and installs are backed up on another hard drive and or partition
Hope that helps
Some may disagree with me, but I have never been a fan for upgrading O/S's, I’d always prefer to go from a fresh