A slipstreamed disk is effectively a copy of the original installation disk with subsequent service packs applied to it, such that any installation using the new disk will be at the SP level incorporated.
Slipstreaming isn't limited to service packs either - you can also slipstream in various product updates, including hot-fixes.
The best How-to information is to be had from the internet - google "slipstream XP SP2" for instructions.
You will need to download the SP itself, plus some utilities to extract the bootable files from the installation CD (e.g. isobuster) and to create / write ISO image files.
And of course you need the original, bootable installation CD with appropriate license!
SD