It can also be a codec problem/conflict. You might try uninstalling any codecs you have, especially if you installed anything like nemo. Then install the WMP 9 or the WMP 10 codecs (or re-install WMP10).
It is doubtful the problem is with the nVidia driver per se (if you have successfully installed it and dxdiag.exe says its proper in tests), since I have run it on several machines, even one with an FX5x00 card and an very old SP1 WMP9 edition.
A problem can occur if your have nLite'd, compressed, etc. winXP, and removed certain dependencies. If you don't know what I'm talking about (or happen to know for sure that know that your XP install is from a full XP install disk), then don't worry. But if you did install XP using compressed/pruned methods like nLite (or removed things from the program directory), then downloading the ENTIRE WMP10 update, MP10Setup.exe:
File Size: 12.1 MB (12,754,672 bytes)
File Version: 6.0.2900.2172
Time Stamp: Saturday, January 29, 2005 12:14:22 AM
Disconnect from the internet (pull the network plug, or turn off network in Control Panel), install MP10Setup.exe, and then reconnect.
This solved several "soft-crash" problems on three machines which were installed with WMP10 removed (e.g., nLite+RVM).
Good hunting...