First off, I would connect the Dell hard drive to another working PC (yours perhaps), & backup the drive by simply copying & pasting to the working PC's hard drive (let's call this the recipient drive).
Most data worth saving will be present in the 'Documents & Settings' folder, so backup this entire folder. Perhaps you can create a new folder on the recipient drive called 'Dell PC Backup', then backup to this folder.
If they had other partitions, then save all the data present there. If you're not sure where the data is, & providing you have enough space on the recipient drive, then backup ALL the directories in all the partitions by simply copying & pasting. We will sort it out later when restoring the data.
II. Restore PC to Factory
If the PC has a restore partition, then great - you don't need to reinstall XP afresh, hence saving you the hassle.
All you need to do is re-connect the hard drive to the Dell PC & follow Steps 2 & 3 in this guide click here. Apparently it'll take 8-10 minutes for this operation to complete.
Once II. above is complete & you have a fully working PC, visit the Win Update (WU) site click here & install all the critical updates (plus optional updates as required). Reboot whenever WU tells you to, & keep re-visiting the WU site till you exhaust ALL the updates offered (all the critical ones anyway).
Finally, once you have a fully updated & stable PC, you can go about restoring all the backed-up data.
Complete the above steps & get back. Then I'll let you know how to restore the data. G
P.S. Btw, Steps 1 & 4 in the above link is assuming you have a fully working Dell PC to begin with, & is the reason why we are skipping these steps