You can try to copy all the files from the cd to a place on ur hdd. If that works you can also try to create a new windows iso and burn it on a cd. Use nLite if you want to do that. The program can indeed also slipstream SP1 if you want to so you won't have to install it again. You can even add files to the iso or, if your drivers.cab is corrupted by a scratch, you can simply use an other windows xp cd and copy the drivers.cab in the place it should be in the map you copied all your xp files to.
nLite Tutorials: http://nuhi.msfn.org/guides.html
If you don't want to edit any of the content of your xp cd it can also instantly create a new bootable iso.
(there is nothing illegal to it, because you can only do it if you own a copy of xp)
If you want to slipstream SP1 into ur iso you need to download the FULL sp1 (not the express setup) exe file (it's called network installation on the windows site). The file is 134 MB and here you can download it:
Remember to select your language on the right!