I have xp also.

First thing I did to get it to work was uninstall everything I had done.
Next I loaded disc one and waited until it said load disc 2
I left disc 2 in the drive until I got the next instruction
I think the instruction was put disc 1 in again but it gets hazy from there
I do know that it was necessary to leave disc 1 in a long time the second time before I got the next instruction
Once it was installed correctly the instruction sent me to the folder titled diagnostics
In that folder were 3 blue BMW icons
First click on the unzip file
Then the install file
Finally open the exe file to start the program

This might be wrong but I am not going to do it again to make sure. I would rather do the tollway thing.

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X5 4.6 2002 Black Sap, Black interior. 2013 X5M Melbourne Red, Bamboo interior
Dallas