. If it's XP or XP SP 1 it will still install no problem. It will simply format to the maximum size of 136 GB, no matter how much bigger your drive is.
That's true if it's a plain XP installation disc. BUT if it's an IMAGE, that could be a problem. The image software would just create one partition 160GB, but the image itself might be expecting a smaller drive. greasydame stated it was a RECOVERY disc.