Tim's answer is correct.
You cannot run Windows from a CD.
Even if you could, since CD access speeds are a lot slower than hard drive speeds, your PC would slow to a crawl.
Very little software, other than installers, runs off of CDs anymore.
Even software that requires the CD to run, have the executables stored on your hard drive, and use the CD for images and graphics.
Since CD-RW disks are about as slow as you can get, and nearly as reliable as a floppy, your system would not workwell, or long with Windows installed onto one.
If you are trying to free hard drive space, you will need to find another way.
If you just want an easy to use recovery disk, use a program such as Norton Ghost to create an image of your hard drive.
Chas