On the XP machine, try installing the mirror driver for UltraVNC (assuming you are willing to use UltraVNC on the server-side)
You can also try updating the video driver on the XP machine. VNC, Windows, and the Display adapter all have to play nice at some level!
as a last resort try turning down the display acceleration on the display adapter (that can kill performance though, so not a good long-term solution)
