Problem: Windows XP was not designed to run on high density displays (i.e. 4k displays). Without the right configuration, this will result on Windows XP having an effective display of 3840x2160 without font and interface magnifying. This renders the VM unusable because of how small the UI elements are.
I struggled a bit to get the right configuration, so decided to share it here to save some time for others.
Just match your VM settings as per the two snapshots below and lastly, make sure you configure your guest XP to have a resolution that's compatible (ration wise) with your host (most displays nowadays are wide displays, like in my case).