Most will answer the SP3 question with 'No', but dont believe them.
I have a new MacBook Pro running 10.5.6. Searching the net I found several documents showing that a Full version of Windows XP version SP3 will install just fine.
Older documentation called out for 'SP2 only'. Later documentation called out for 'SP2 or Later'. Now you will read 'Windows XP version SP2 or SP3'.
Also adding to the confusion is the difference between 'Updating' to SP3 as opposed to 'Installing' XP version SP3. To 'Update' to SP3 requires a current install of XP SP2 and a download of the Bootcamp 2.1 Update. A fresh install of Windows XP version SP3 requires the Bootcamp 2.1 update 'after' XP is installed.
I just installed Windows XP version SP3 without any problems at all. I used the System Builders disc from Newegg.
Used Boot Camp Assistant to partition, inserted the XP disc, it automatically installed perfectly, ejected it (as I had read, I had to eject it by holding down the touchpad and re-starting, it booted right back into XP and ejected the XP disc, no problem), inserted the OSX Installation disc, it automatically brought up the Boot Camp program, followed the promps and it installed without a problem, it re-booted back into XP, downloaded the Boot Camp 2.1 Update and installed it without a hitch. Ejected the OSX disc. Went to Windows Update and installed all the latest Updates, Securities and Service Packs that it had, a total of 45 through both 'Express' and 'Custom' over several required re-starts and returns to Windows Update.
I now have a fully updated Windows XP version SP3 running smoother and faster than it did on my old PC!
Now to install Nod32 then O&O Defrag 11 and run it through it's paces then I'm done and happy!