Depends on what you did here with the XP CD and what Type of CD it was. If it was a Dell Recovery Disc then that is overwriting the entire HDD and the existing OS and most likely making your Data & Settings not to mention previously installed Software unaccessible.
If it was a M$ Branded Install Disc and you used Method 2: Repair install of Windows XP by starting your computer from the Windows XP CD then no it's not going to overwrite your Existing OS and Installed Software and Data. It is repairing the existing OS though it will not include any Service Packs and Hot Fixes released after your XP CD was made.
The process going on is finishing whatever you started when you attempted to Repair using the XP CD.
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