Okay, Here's the deal on Running XWA in XP as of June 4 2k8
Caveat: This works on my particular set-up, cant guarantee it will on yours. But it looks promising considering how much trouble I went through initially trying to get this game to run.
I had tried the fontfixes, I stayed away from the guide to manually fix the font because that sounded like way too much time and work.
I installed Glidos, I installed DGVoodoo glide wrappers... it dint work. Fonts were still messed up.
Well in the process of trying to get another game, I-War, running I came across this: zeckensack's Glide Wrapper 0.84c.exe
I installed it. Now maybe all of a sudden something just clicked and is totally unrelated to me installing this particular glide wrapper, but I seriously dont think it was a coincidence...
After I had installed this, I:
Installed a fresh installation of XWA (the 2 CD set with 2.02 already in it)
(optionally) Installed xwing_alliance_sfx_upgrade1.0
Booted up the game and everything was perfect. Fonts in max res (1024x786) were nice and crisp.
My graphics card is nVidia 7800 series GT
Also, installed Tie Fighter 95 (From collector's CD) and that ran perfectly too.