From what I have read I believe that it is not necessary for the boot cd. I did not how ever find a outright statement to this fact( ie xp need not to be actived). Is this correct? If so consider adding this in the faq. If I missed the statement somewhere, sorry it is four o;clock and my brain is asleep altho the body conitinues( I just pretend I am at work )

All you need to create the CD is a licensed copy of XP. There is no activation on the CD, although the CD does have a 24hr running time limit. If this limit is reached the CD will just shut down and you'll need to reboot it again.

However if you need to slipstream SP1/SP2 into your source disk this does need to be done on a PC with WinXP installed.