Hm. That is interesting, given that I just received a reply from VMware support, which I will be quoting here:

"Hi Marco,

According to my understanding with reference to the problem description
recorded in support request, you have received for Nvidia card updates in
Windows XP Guest OS.

Could you please let me know, are you running Boot camp partition as a
Virtual Machine and also have you installed boot camp Drivers in Windows XP
Guest OS?

If you have installed Boot camp Drivers in Windows XP Guest OS, at the time
of installing boot camp drivers If you have selected 'Automatically Software
Update for Windows" option, it will give the notification if any updates are
available for Windows Drivers when the Windows XP Guest OS boots.

These drivers are useful for your system if the system has Nvidia Graphics
cards, and should be installed in Native boot camp mode.

I would like bring your kind notice that, when you create Virtual Machine
from VMware Fusion, it creates a Virtual Machine with minimal configuration
of the system. The virtual machine sees a 'Virtualized' SVGA II graphics card
created by VMware Fusion. It won't recognize as a full features of Graphics
card which is in Host System.

How ever the Windows XP boot camp Virtual Machine will not recognize the
Nvidia graphics drivers since the VM uses it's own SVGA Drivers for your
Graphics card.

I suggest installing the latest Nvidia Driver updates in Native boot camp
mode."

Got it. Thanks.