Later this month, Microsoft will introduce Windows XP SP3, a significant, primarily security-related update for the OS. The update may introduce problems XP installations under Boot Camp. We've received reports of issues with beta developer builds, including an inability to boot. This doesn't necessarily portend similar issues for the final release, but is cause for caution.
Also, note that you should ensure ample free space is available on your Windows partition before attempting to install Windows XP SP3, or you may be faced with the message "disk is too small to install/update." If your Windows partition is formatted with NTFS, a tool like iPartition should be able to do the job. If you use FAT, you may be forced to erase your Windows partition and start over with a bigger slice.