First of all be aware that Windows XP is out of MS product lifecycle (http://support.microsoftcom/lifecycle ) since April 2014 !

However, if you should face the following issue…

On a single Windows XP SP 3 workstation you receive the following error message when installing MS Dynamics AX 2009 SP 1:
Update "Service Pack 1 for Microsoft Dynamics AX 2009 Components (32 bit) (KB956568)" could not be installed. Fatal error 1603.

.. then check out the following Windows KB http://support.microsoft.com/kb/834484/en-us and make sure your work with local administrator permissions when you perform the installation!