Go to this site:
http://www.microsoft.com/windowsxp/downloads/powertoys/xppowertoys.mspx

1. Download the TweakUI.exe file in one of your folder or make a new folder
for it.
2. Once downloaded, double click on the file to install.
3. Click on Start and All programs.
4. Powertoys for Window will be listed there. Place your mouse pointer over
it and you see a list, click on TweakUI for Windows XP to start it.
5. A window will open, click on the + sign at the left of Explorer to open
it. Click on Slide show. A window will open.
6. Change the default (5000) to what you want. Each 1000 = 1 second.

For transition, you can try the free photo story 3 from here:
http://www.microsoft.com/genuine/offers/

You can also search the internet with something like "photo slide show".
Plenty of commercial software for slide show with transitions, music, etc.