How much hard disk space does windows xp use?

The Capacity is not dictated by the software, but more along the lines of your hardware. Windows is capable of storing up to 26 drives with Letters A-Z but usually 3 of those letters is in use by Peripherals such as CD drives and Burners along with floppy drives or removable media. Hypothetically you should be able to store numerous terrabytes of information. There really is no set limit that I know of.