Hello Friend,
Idon't think its possible to make a copy of windows. And as far as I know that windows cd can't be copied and i doubt you can copy the files from when its already installed. also the boot cd should be the xp cd.
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Just burn the Iso with some proprietary burning software http://www.magiciso.com/tutorials/miso-features.htm. If you want to pay money and don't want to take the obvious route you could use a linux live cd.