I saw this blog post and I got the question a few times at Tech Ready this week.  Just to clear things up, WPF/E does not have any system requirements besides a supported OS and browser.  The WPF/E runtime does not require an install of the .NET Framework.  It doesn't require an install of Windows Media Player.  The 1.1 MB Windows install includes an XML parser, image codecs, media codecs, a media pipeline, a text rasterizer, animation and vector support, javascript language binding, a downloader and ActiveX and Netscape plug-in wrappers for various browsers.  Take a clean install of XP SP2, add 1.1 MB WPF/E and that's all you need.