You should try VirtualBox again sometime. I switched to it from Virtual PC and haven't looked back. The only thing I keep Virtual PC around for is Windows 3.11 which hangs on VirtualBox.
And don't even dream of trying Linux on Virtual PC.

Runs about 5x faster in VirtualBox. Well I have no hardware virtualization so the gap is probably narrower with it... still, Virtual PC is optimized for Windows so at least for other OSs you should consider other virtualizers.
I assume you mean 5GB in the first post. That's a bit low for a XP VM... unless you've used nLite on it or have been careful to watch the disk space usage (but I doubt that's your problem).
I and countless others have not had problems with XP VMs so I can only give you general pointers:
- Try to think of anything you might have done on your host or guest OS between "today" and "yesterday" that would affect it. Software doesn't just break when the clock goes forward (except for Y2K, and in 2038).
- Try using nLite to make a lightweight Windows XP installation CD with only the components you need. It will run faster and may be more stable for you. You can also integrate XP SP3 and hotfixes right onto the CD image.*
- If lightweight isn't how you roll, still try using nLite to make an XP SP3 image (there are guides all over Google, basically you just need to find the large SP3 installer as opposed to the "web installer", as well as SP2 if your XP CD is pre-SP2). It will include most of the bug fixes Microsoft has released and could solve your problem.*
- Try waiting it out. Depending on your hardware capabilities the VM just might be slow. However considering Virtual PC seems to be working this is probably not the case.
- Try booting the VM into safe mode and disabling any third-party startup stuff you had set to run to see if that fixes it.
Without the settings and logs Sasquatch asked for it's really tough to give more specific help.
* - You can also "acquire" premade XP SP3 ISO images on the internet if you know where to look. It's not technically illegal if you use a legal product key you own.

There are also some nice pre-made super-lightweight versions of XP and Vista floating around.