Is your version of XP updated with all the latest firmware?
A solution i found for a friend of mine that was having trouble with XP and iTunes was creating another admin account on the computer...and when we tried installing iTunes on that account, it worked fine (and allowed all users to use iTunes, regardless of what account you were signed into). If you are still having trouble, this is an easy way to try and see if its simply not allowing it on the specific account you are logged into on XP...
These kind of issues are one reason i live by macs...you simply do not experience this kind of stuff, even with microsoft programs! lol...