Really, hate to answer you this way, but - it depends!
First, what files are you talking about? Windows 2000 system files or
files YOU created while working under Windows 2000.
If you are worried about personal (not system) files, you should know
the Windows XP installation program will not delete any of your files
unless you format your hard drive.
If you are worried about your Windows 2000, Windows will ask you what
to do.
First choice: install Windows XP in Windows 2000's directory. This
will erase your Windows 2000 installation and replace it with Windows
XP.
Second choice: install Windows XP in a different directory (or on a
different hard drive, or disk partition). This will preserve your
Windows 2000 installation and when booting up your PC a screen will
ask you which Windows you want to load.
Again, in all of these scenarious your personal files will be kept
unless you format your hard disk during the installation process.
Svetlozar Aleksiev,
Product Manager, Svetlozar Online Ltd.
http://www.svetlozar.com