Since he's running Ultimate, he can download XP Mode for free from MS's website...
As true as that is, if I were him I would not even bother with xp mode.
Reason number 1 and always, xp mode can be buggy at times and laggy even with good specs to boot.
Reason number 2 virtual box in itself is bit more compact on saving space when installing virtual os disks.
Its really up to him, it would beat trying to make a iso out of a windows xp disk, then again your dealing with xp mode which isn't perfect and shiny to deal with at times. :\
"Man will never be able to beat the Machine"