1) Did you realign the partition, or recreate the VM in Version 3 using Easy Install Wizard?
2) Only use 1 VPU
3) How much free RAM is on the host machine?
4) Remove snapshots, and system restore points
5) Copy the VM to another drive, then copy back (to defrag it).
How did you create the XP VM? (install from scratch? import?)
Was the XP VM always so slow? Or did it work fine a while ago and then it got bad? In the latter case when did this happen and what other things happened around the VM? Did you configure 1 vCPU? Slow boot times can be caused by disk issues (alingment,fragmentation).
From your description it sounds like there could be a configuration error or hardware profile (HAL) mismatch inside the VM guest OS. I am running an XP VM very fast without any issues on Fusion.
There is a very long thread on Fusion perfomance from early 2010 which contains a lot of complaints but it also lists a lot of hints and potential solutions: http://communities.vmware.com/message/1437094 - maybe this is helpful to you.