As a pure MD, yes, easily - but you don't install anything (DVD or otherwise), you just tell your BIOS to boot from the network and it will boot from your LMCE core/hybrid machine over the network.
As for installing the actual core/hybrid as a dual boot machine - no, not really that would be to misunderstand the system. The core/hybrid needs to be on all the time and to be a router between your Internet connection and the rest of your home network. That doesn't lend itself to dual booting. Set up a true core machine and leave it on permanently. Then on your XP machine, you can boot from the network at will to get a Media Director (MD). In this mode, the XP PC will be a diskless machine, meaning it will essentially ignore the local harddrive... ie you don't need to install anything, and it will leave your XP hard drive untouched.