Oftentimes, when users try to skin Windows XP they end up installing software. The first piece of software is called WindowBlinds and while it certainly does make your desktop look nicer than a typical XP skin can, the look comes at the heavy price of RAM and overall, the skinning slows down your computer a massive amount. The other program is StyleXP. This program applies a typical XP skin, but comes at a price. Why pay, when you can get the exact same end result for free. StyleXP can sometimes hide skins in its own format preventing you from using a certain skin, but don't worry there are plenty of skins to choose from that will work.
Setting it Up
The free process is simple, we patch the system. Under normal conditions, Windows XP only allows the system to use their certified skins, any others will not be applied. We just need to patch the file on the system (UXTheme.dll) that checks to see if a skin is a Windows-made skin. This is easier than it sounds with the automatic Universal UXtheme.dll patcher, which you can get here. After you download the file, run it, click patch, and follow the instructions. The process is fairly straightforward. Once the file is patched, restart your system.
Getting/Applying the Skins
You are now free to use whichever skins you wish. Search google for XP Visual Styles or Themes or something of the sort. In my opinion, deviantart.com has a great collection of skins: Customization > Skins & Themes > Windows Utilities > Visual Styles.
Simply download a skin, unzip it (right click Extract All...), and look inside for a .msstyles file. You may need to extract more than once to get to it. The file should have an icon of a paintbrush painting a window green. Double-clicking that file should open up the Display Properties dialog and show you the skin. Change the color scheme if you want and click OK. The new skin will be applied. Oftentimes, the skins will have icons and fonts to accompany them, these are optional. When applying a skin, "Compact" shortens the Start Menu by showing icons without text for My Computer, My Documents and so forth.
However, you may notice that if you set the Display Properties > Appearance to a different skin, you will not be able to go back. To reapply any skin, you must go back to its .msstyles file and double-click, it will not show up in the menu under Windows and buttons.
To do this is a bit more complicated but optional. For the theme to show up on that menu it
must be under C:\Windows\Resources\Themes\[Skin's name]\[Skin's name].msstyles
Note: be sure to copy all files that you extracted, some of the other files may be necessary for the proper functioning of the skin. Make sure that the folder and the name of the .msstyles file are EXACTLY the same. Even a space can throw it off and your skin will not show up in the menu.
My Favorite Skins
If any skin creator wants their skin off of this list let me know.
This skin leaked from Microsoft itself. There is also a light blue version. Since this is a Microsoft skin, you will not need to patch the system to use it. Find it here.
This skin I found while writing this article. It's simple and clean. Perhaps too clean for some, but if you have that kind of a taste, go for it.
This is my skin at the time of writing this article. Aquanox comes in both light and dark blue and is generally comfortable.
NeoGeniX is one cool-looking skin. The background can glow in either Green, Orange, Blue (as shown), or Pink. The File information bar of explorer can be either Left side [LS], Right side [RS] (as shown), or Top Side [TS].
OR YOU CAN DOWNLOAD MY VISUAL STYLES COLLECTION
Download and right-click extract to C:\Windows\Resources\Themes\ and all the new skins should be available when you right-click the desktop and choose properties > Appearance. Make sure you do not extract to a subdirectory making MSSTYLES COLLECTION a folder, this will throw off the whole process. To simplify the process, you can right-click on the file and select Extract All... and when it asks you "Files will be extracted to this directory" type exactly C:\Windows\Resources\Themes\
Congratulations on your new skins. Enjoy!