Password requests depend on the system involved, the CDs used, and user intent.http://www.microsoft.com/genuine/ProgramIn...8d-a541ba3aaba9
If one has a Microsoft Genuine Windows XP install CD...a user is prompted for a password:
a. When such has been implemented by the owner.
b. When attempting to access the Recovery Console from that CD. In most cases, this prompt has nothing to do with implemtation of an actual password...and can be overcome by just hitting Enter, moving to the command prompt for RC commands.
BIOS passwords have nothing to do with installing XP or Microsoft. Such (BIOS passwords) are implemented by the manufacturer/seller to enable restricted access to that particular system.
Many laptops come with a very strong BIOS password capability that locks up the hardware and makes the laptop completely unusable. This is the password that has to be entered before the operating system loads, usually on a black screen a few seconds after the laptop is started.
Of course BIOS password can be set on a PC too, but there it is stored together with the other BIOS settings - date, time, hard disk size, etc.!
However, most laptops store the BIOS password in a special chip, sometimes even hidden under the CPU, that is not affected when the rest of the BIOS settings are reset. This makes the removal of a BIOS password on a laptop almost impossible. The only option in most cases is to replace the chip which is quite expensive and risky procedure and, of course, not supported by the manufacturers.
Some manufacturers (like Dell) can generate a “master password” for a particular laptop (from their service tag) if sufficient proof of ownership is provided. Others (like IBM) would advise replacing the laptop’s motherboard (very expensive). On some old laptops (4 - 5 years or older) the BIOS password can still be reset relatively easy, usually by shorting two solder points on the motherboard or by plugging a special plug in the printer port, etc.
In almost all cases on newer laptops it is either a big hassle, expensive or even impossible to reset the BIOS password, making it a very good way of protecting your laptop from unauthorized use.
So much for BIOS passwords...
Recovery/restore CDs...vary in how they are used...and should not be considered MS XP install CDs.
If the system is riddled with malware...a clean install seems the approach that I would take.
Clean Install Procedure with Illustrative Screen Captures - http://www.theeldergeek.com/xp_home_install_-_graphic.htm
XP Clean Install, Stevens - http://www.michaelstevenstech.com/cleanxpinstall.html