Follow this guide to slipstream XP with the Service Pack of your choice and then instead of using Nero use K3B with these settings to burn the CD:

(original site)

Settings that DON'T matter
- load segment
- volume name

Settings that DO matter
- file system

So now, k3b settings.
In "edit boot images"
- Boot Load Segment: 0x0 (My retail CD actually shows 0x0, but you can use 0x7C0 if you really want)
- Boot Load Size: 0x0

In "Properties" -> "Filesystem"
- Select "DOS Compatibility" then click "Custom..." (I selected DOS... just cause it's the cleanest template)

Then make sure the following are checked
- Generate Joliet extensions
- Omit version numbers...
- Allow 31 characters...
- Allow ~ and #...
I left everything else unchanged

Now burn and you're good to go.

Actually, if you're really lazy, all you really have to do is
- Select DOS Compatibility then click "Custom..."
- Check Allow untranslated ISO9660 filenames.