I have done this a number of times. Shop online or your local computer store for a 2.5" to 3.5" hard drive converter, should be less that $10.
Remove laptop hard drive and slave into your desktop box.
Copy the Install directory from your XP CD onto the laptop drive.
Now comes the fun part, you must make the drive bootable. If your desktop is a win 98 box this is easy, just right click on the drive letter for the laptop drive and select format, then check the "copy system files only box", when that is complete go to a command prompt, run fdisk, select the laptop drive and set the partition as active---shut down system, remove dive, place in laptop and at C prompt change directories to win XP directory and run setup.exe
If you desktop box is an XP box, you will need to find a 98 box and make a boot floppy. Be sure to copy sys.com and fdisk from the windows\command directory on the 98 box to the floppy. Boot your box up on the floppy identify which drive is the laptop drive letter, then from the a: prompt run sys x:---where x is the drive letter of your laptop drive.
Then run fdisk from the floppy, select the laptop drive and set the partition as active.
Hope this helps, good luck and feel free to sticky me if you need any clarification.