Open up nLite, select your windows XP iso that's been extracted to a folder, hit next, get to the part where it asks what you're wanting to do and at least tick "Service Pack" and the option near the bottom to make a bootable ISO. Next screen it should ask what you want to add and you just need to give it the main EXE file.

Worth noting that you will run right over the size limit for a CD-RW so you'll either have to find another way to install XP or just install the service pack after the fact.

What about the post service pack updates? I read at some point a setting needs to be turned off for older CPUs like mine

I like to keep this pretty simple personally -

In nLite, and starting with a Windows XP SP3 ISO, I integrate this update pack:
https://www.wincert.net/forum/topic/17130-rep … cks-final-v110/

If your target is a processor WITH SSE2, you can also integrate the POSReady 2009 updates:
https://www.wincert.net/forum/topic/17131-rep … rue-addon-v102/

Unofficial SP4 is like many of the other unofficial service packs folks have created - it goes above and beyond for sure, but perhaps too far (imo).

Yeh my Pentium iii doesn't have SSE2 so no POSReady for me
Cheers for links though, gives me more/better options 😀