I know at my work we have CD's like it too.
They install XP Professional SP2, then uninstall Outlook, and unnecessary files like games etc., then they install managed software like thunderbird, firefox, office 2003 pro etc.
I know it searches the network for those apps though I think, I think the CD directs to our apps server which from there remotely installs images of the various softwares we use...maybe it can't be done by a home user without a network then...now that I think about it ugh...
I'm sure there's a way to create some sort of managed xp image though for me to just load on any PC and install my essential files and Pro SP2 the way I want it customized too. Then just run a second self-extracting CD of all my programs I want installed lie antivirus material, spyware programs etc.
AMD 3400+ 2.4GHz
1GB DDR Crucial RAM