Well...I don't believe you can slipstream with restore/recovery disks anyway
. I've not seen anything that I would trust to work that indicates a working install CD was produced by efforts directed towards such.
As long as you have either SP2 or SP3 download and you install that after the MCE initial install, the entire hard drive would then be useable (but not seen in anything other than the BIOS and Disk Management). Useable is not really useable in XP until the space is formatted/partitioned.
The problem would be that your partition size could only then be adjusted by a tool such as Partition Magic 8.0 or later, since there is no XP support for altering partition sizes...other than creating new ones out of the unallocated space. You would be able to natively create additional partitions...but you could not alter the size of C:.
I don't think a C: partition that is larger than 40GB is a desireable thing, but that's just personal opinion.