I think there's somewhere on MS's site you can download SP3, then you can put it on a memory stick or such. I don't think you need to be online while installing, etc.
Edit: Ah, first result in Google for 'windows xp sp3'.
Win XP SP3 has a standalone installer and yes you should be installing Winxp offline anyway.. you can always install Winxp SP2 then go online while installing sp3. I wouldn't go online with anything less than SP2, so if your install disk is less than SP2 don't go online until you install SP3.