I've been working on a new slipstream guide, this time for Windows XP with Service Pack 3. I'm going to try and make it as simple as possible and focus only on using free tools that anyone can download online. So far, the results have been excellent. I hope to be able to finalize this soon.
In the meantime, I thought you might be interested in what the experience is like installing a copy of Windows XP that already has SP3 integrated. As you may know, installing Windows XP with Service Pack 2 (SP2) today involves a horrific series of post-install updates. In fact, in the tests I've done recently, the first pass through Microsoft Update required a whopping 94 updates(!!!). This is reason alone to integrate SP3 and start from there. (Or migrate to Vista of course.)
Anyway... After installing XP integrated with SP3, there are still a few updates to install, but nothing like the experience with SP2. In the virtual machine installs I've been testing lately, there are typically five updates to install, but they're all optional. (Annoyingly, this is followed by three critical updates ... for the optional things you just installed. Typical.)
Plus, with SP3 you can now forego the Product Key during Setup, which is especially nice when you're testing things as I am.
Here are a few shots showing the install/post-install experience of Windows XP integrated with SP3.