Sounds like there are broadly two ways of getting a small WinXP installation:

• Build it that way using a tool like the freeware nLite — here’s an article about it
• Do it after the event by ripping stuff out using something like XPlite (not freeware, but free trial available; it also works on Win2K, and also available for Win98) — article here

Something else to do for performance is shutdown extraneous services, though it’s said this doesn’t gain you much. This guide goes into a lot of detail, but is painfully formatted with one service per page. This guide is a bit briefer. This one is a nice balance.