If you'll all get of your soap boxes for a minute, the man asked a question.
No, you can't install XP from the recovery disk. You could buy an OEM copy, depending on how legal you want to be. It certainly won't show up as illegal., but it should only be sold with a new PC or the components from which to build one. An OEM licence is not transferable either, i.e. it is for one PC only.
Not sure why people have a downer on Vista. It does need a monster of a PC to run it properly and there is poor legacy support for old hardware, so I wouldn't try to install it on an old machine, but that said, I'd never go back to XP.