Windows XP : How do i set my windows xp computer to factory settings?

I would suggest formatting the system and re install the operating system

I would suggest you to follow these steps:
1. log in as administrator.
2. Open the Computer Management application by using the Computer context menu. Select Computer Management.
3. Go to the diskmgmt.
4. Then goto the disk managment console.
5. select the extendable disk.
6. Then click on next,next button.
7. Now finally click finish button.

When our computer is turn on then press F10 continuously. You will redirect to the recovery screen, click on advance options then click next. It will delete everything that didn't come pre-loaded.