If you need to create symbolic link in Windows XP download Junction. It can do the same and it is available for free 🙂
There might be a lot of reasons for this, but in my case I had a fresh Windows XP SP3 installation and Windows Update has been using almost whole CPU. After a lot of googling I fixed that problem by installing security fix from Microsoft web.
The problem is described in the following article: Problems with Intelppm.sys and processr.sys under Virtual PC / Virtual Server
I had a similar problem on VirtualBox by it was caused by the AmdK7 driver instead.