The fastest way to install is to make an ISO image from your original XP discs and install from there. Or better yet, use nlite (free download) and download SP3 for XP (from Microsoft) and then you can slipstream SP3 into your original XP media and make a new ISO file that contains Windows XP SP3...then you only have to run Windows update to catch what is left.
I've used the full slate of VM products out there. We use VMWare VSphere at work, so I'm most familiar and comfortable with the VMWare suite of products. VMLite is based off from Oracle Virtual Box, so it works and runs just like Oracle Virtual box...which I used to use quite a bit and it's a very solid product.
My vm software of choice these days is vmware player. It just does what I need it to do and I have the most familiarity with it based on what I do at work, so that's what I stick with.