performance of a VM depends on many things but usually the amount of RAM available is generally the most important factor followed by the quality of disc drives -- for example if you are running a vm stored on a USB2 disc it could take a long time to start up.
Windows XP mode itself is a HORRIBLE solution -- performance is a DOG and graphics are a disaster zone.
Download VMware vmplayer --latest version is really good (and FREE) and with a decent computer your XP virtual machine can run at almost true native speed. The graphics have been fixed too so DVD playing on your VM is possible and a lot more "legacy" games playable too.
The only drawback to using VMware is you'll have to install an XP system as your virtual machine --but the effort is definitely worth while.
I'm currently running a Virtual 2003 server using VMware's latest software and the performance of my applications running on it are fine.
I've attached an old HP plotter on it --works brilliantly -- this hardware is of course no longer available --modern stuff would cost around 20,000 USD so I'm not getting rid of it any time soon. Even on the W2003 server I'm using the Windows 2000 driver
for it (that was its last update !!).
(Another advantage of using latest version of VMware is that VM's can run in the background --and remote users can log on to applications without even having to have an account on the HOST --very useful for my windows 2003 virtual server.
Unity mode is also fully enabled too if you like that feature in XP mode.
I really say again for using a VM forget XP mode - it's HORRIBLE. It was a quick cludge made by Ms in a hope to get people to move away from XP quickly.
(Thank goodness Ms haven't done the same trick with Windows 8 running in "Windows 7 Mode" !! although reading lot's of posts on the W9 forum perhaps Ms should have done this too !!).
I see you've fixed your immediate problem - but dual booting is usually inconvenient and best avoided if possible -- run a Vm with the latest version of VMware player -- then you only need to start the vm when you need it and it will run at almost Native speed !!!!!. VMware have done an EXCELLENT job on the latest versions --VMware workstation 9 (Paid) and VMware player (Free).