Of course, your mate is going to back up everything first so that if it does all go mammaries up, he won't have any worries.
He also needs to note all his hardware types just in case he needs to re-install, email settings in Outlook etc. All needs to be to hand.
Unless someone has already done it and offers counter advice, I'd run the CD and elect ntfs file system (not FAT32) when offered the choice. That will ensure compatibility with XP.
If it does go wrong, that's the time to trash the drive and start again clean.