Be careful when playing with the lid thing, while IzzehO's advice is correct some laptops (including many dell machines) take it upon themselves to still send signals when the lid is closed which can slow a machine right up.
Switches are usually fairly simple though (magnets, rotary switches, push to make and basic two poles connected switches are the usual methods)
Some tack it into the screen lock, some the hinge, some the magnet somewhere else but they are usually easy enough to defeat.
Fast boot, newer machines do come with a BIOS loaded cut down OS but I doubt your machine does. IzzehO's advice is again spot on but you can also do things like load an OS (you can do XP but whether you want to or not is a different matter:
http://www.ngine.de/article/id/8 ) from a USB drive.
You then have several options and things to do, IzzehO is correct on the BIOS settings although being a big box vendor laptop you can probably do little more than set the time*, stop detection and boot right from the drive are good.
Next up software, if you are not running a version of linux*2 (XBMC along with various spinoffs and alternatives come in really nice linux distros these days) you get to optimise your XP install (you also have the option of tinyXP). Windows optimisation is the subject of hundreds of websites but my three main tools are
a squared hijack free (make sure to get that one as the download page is used for all of the software the company sells):
http://www.hijackfree.com/en/
nlite (makes a custom install disc but it works amazingly well for optimisation among other things)
http://www.nliteos.com/
Sidenote if you want you can wind your media apps (looking at CCCP), drivers and other stuff into the install so you have a nice unattended install should you ever have to or you can just image the disc.
any windows GUI tweak tool, mine varies depending on what I have on me.
A search for xp tweaking tools should do it.
Now we talk hardware, the slowest part of any machine is the hard drive. An XP install if made properly can be well within inexpensive but fast CF card size, CF is but IDE/pata in a different form factor...... -> poor man's solid state drive is easy and cheap. SATA versions exist if you are stuck with that.
usual need a gig (preferably two) of ram. You can get away with less but if you plan on using your media box to record (which usually involves transcoding) then two is good. You can stick your videos and even stuff like my documents, desktop and whatever else on another drive quite easily (I do it across multiple partitions all the time).
*some laptops or other locked down machines have "hidden" BIOS modes to do more fun things, it varies from model to model and some have nothing (dell seem to vary in my experience).
*2 you say old machine, usual rule of thumb for linux is two year old hardware (if desktop less) probably works very well.