#1: nLite -- Get your XP disk. Copy all files to some folder. Run program, follow GUI wizard. Burn created iso. Done
#2: Yes. Just stick it in Start-->Programmes-->Startup and you'll be good to go. Or you can get fancy and setup the registry manually to earn extra geek points.
#3: My C3 1Ghz equivalent to P3 700-800Mhz with 512Mb of RAM, 3.5" HD, gets me from off to blaring music in around 20-25 seconds depending on how it shut down last, temperature, and if my M2 is normal or turning it on late (crazy psu!). BIOS is the biggest thing. Oh, and I use a FULL copy of XP Pro (Initial release no SP2 crap except NET 2.0). Set your bootable HD to first device, and DISABLE (not just ignore) all the other boot devices. With the IDE devices set to your specific HD properties, not to auto. Disable boot on LAN. Disable logo. Disable virus checking. Disable everything.