Unless you have a good reason. don't upgrade Tools in a working XP VM. The tools for XP haven't been updated in years, and the latest versions aren't supported (and likely won't install) on XP. VMware Tools version 10.0.12 was the last version to support XP.
Take a snapshot of that virtual machine and/or back it up before doing anything further.
This isn't Fusion specific. Search the web for "upgrade vmware tools Windows XP" for example and you'll find lots of discussion.
One hit might be of interest: the following KB article, for example: https://kb.vmware.com/s/article/1001354
- Paul (Technogeezer)
Editor of the Unofficial Fusion Companion Guides