Yes it is compatible with XP. All versions of Office at least since 4.3
(Word 6 from 1994) will install and operate properly on Windows XP. There
may be a few things that won't work as expected but I haven't run across any
personally.
You didn't say what version of O2K you have, OEM or retail but just in case,
if it is OEM and has been installed on another machine, you can't install on
a different machine "legally."