Bare-minimum hard drive space to install Windows XP SP3 Professional?
This is just a possible solution to make the XP Install take up less space.
Have you ever heard of nLite? Basically, it allows you to add/remove components to a Windows XP installation (e.g. drivers, applications, services), and create an unattended install if desired.
I always remove the stuff I don't need from Windows (e.g. firewall, defender, wireless services, indexing) to save space and increase performance (also, there's no point on keeping the Microsoft versions of software if you replace them with something else anyways).
I created one version for a Virtual PC, so I basically ripped everything out of it, and got the final install size to under 300mb (and if I compressed the image with WinRAR, the virtual hard disc shrank to ~165mb - the same size as the ISO). On my normal XP disc, which retains most functionality (including wireless), the install was about 400 to 500mb (without a pagefile!).
A lot of stuff is done on the partition that Windows is on (think temporary files from all types of files). I once ran out of space while trying to extract a large set of files from an archive, even though I wasn't extracting to the partition Windows was on (but the unarchiver was saving some temporary files there). Also, a few programs, although installed on a different partition, copy some files to C:\Program Files\Common Files (that folder is taking up nearly 650 MB on my PC).
On top of the minimum 4 GB everybody is recommending, I suggest you leave a little bit more, just in case (about 1GB should be enough); it never hurts to have a bit of breathing room :)
The default Windows XP installation requires approximately 1300MB (ex. drivers, pagefile and hiberfil).
Of course, that can be reduced significantly with utilities such as nLite (better results but unforgiving, you don't get it right it's back to the drawing board) or XPLite (you can restore removed components with a few mouse clicks). Here's a screenshot of an installation on my Eee 701 4GB where disk space is a scarce commodity!