I had a CD Key but no disc, so I downloaded an XP CD from a torrent and tried to boot it. It wouldn't boot so I went into 2k and started the installation from there. It then installed XP inside 2000, leaving all of my documents and files intact (programs were still in Program Files, but since XP has a new Registry and Windows directory, they need to be deleted and reinstalled). Then you'll get a prompt on boot asking whether you want to boot XP or 2000, you can then boot XP, go into C:, delete the "WINNT" or "WIN2K" or whatever your 2000 folder was. Then do "msconfig" in the Run menu and go to boot.ini tab. You can then remove the Windows 2000 startup entry to disable the menu and boot straight to XP.
Or, if your CD boots fine, you can simply wipe the whole PC and start from scratch.