Do you mean "repair" XP?

That will be the case if you haven't slipstreamed your service pack(s)
with your original installation disc.

You're getting that message because you're trying to start the installation from
within Windows. You need to boot from your installation CD and then start the
installation.

If you're looking to perform a repair installation, take a look at the article
listed below. A repair installation should preserve your data and installed
programs. You will have to install any updates and patches to Windows that were
released after whatever service pack is integrated into your installation CD.
Keep in mind that you should back up any important files before attempting this
procedure.

Courtesy of Michael Stevens, MS-MVP
Windows XP Repair Install
http://www.michaelstevenstech.com/XPrepairinstall.htm

If you want to replace your current XP installation with a clean version, take a
look at this article.

Courtesy of Michael Stevens, MS-MVP
Clean Install Windows XP
http://www.michaelstevenstech.com/cleanxpinstall.html

Keep in mind that you can reduce the amount of time spent updating Windows by
creating what's called a "slipstreamed" installation CD. Take a look at this
article for more info.

Create a Slip Stream version of Windows XP
http://www.webtree.ca/windowsxp/slipstream.htm

Here are some of the files you'll need to obtain in order to follow this
procedure:

Windows XP Service Pack 2 Network Installation Package for IT Professionals and
Developers
http://www.microsoft.com/downloads/details.aspx?familyid=049c9dbe-3b8e-4f30-8245
-9e368d3cdb5a&displaylang=en

AutoStreamer 1.0.33
http://fileforum.betanews.com/detail/1092632287/1

CDBurner XP
http://www.cdburnerxp.se/download.php

Since Service Pack 3 has been released, you might want to integrate it into your
installation CD. The procedure will be similar to slipstreaming Service Pack 2.

Windows XP Service Pack 3 Network Installation Package for IT Professionals and
Developers
http://www.microsoft.com/downloads/details.aspx?FamilyId=5B33B5A8-5E76-401F-BE08
-1E1555D4F3D4&displaylang=en

Good luck

Nepatsfan

This is what happens when you perform a repair install (which keeps all
your data and programs intact) instead of a clean install (which wipes
everything off your hard drive, so you start off with a clean slate)
*and* if the Service Pack level of the installation disk is earlier than
what your PC's Service Pack level is.

Do you want to start fresh and perform a clean install? If so, make sure
you back up all your data and settings (including e-mails, Internet
Explorer favorites, etc.). Also make sure you have all your programs'
installation files. And make sure you have all the drivers you need. One
of the links Nepatsfan gave is for the clean install.

In the event you just want to perform a repair install (again, Nepatsfan
provided a good link), you can either create a slipstreamed installation
CD as others have mentioned or simply uninstall the Service Pack(s) you
have (using Control Panel | Add or Remove Programs) until you are at the
same level as your CD. Perform the repair and go back to Windows Update
to reinstall the Service Pack.

The above already being addressed, why is it you want to reinstall XP?
Perhaps there is a better solution to your problem.