"Starting from TestDirector 7.2 with Service Pack 4 Windows XP client machines are supported. However, there is no version of TestDirector that will support Windows XP server machines. Support for Windows XP is still being worked on for future versions of TestDirector."
There may not be any "support" for Windows Xp but I have XP Professional acting as both the server and the client for a TD 7.5 install and it works just fine. There should not be a need (unless your standard install leaves this out) to install IIS on Win XP Pro as it's part of the original setup.
The install of TD 7.6 on WinXp won't work. It's setup is set to look for certain OS info that is not in XP but is on Win2000 - if you can trick it maybe you can install it but not sure how - except to copy the WinNT folder from a WinNT machine and paste it onto your C drive but then that may cause screw up in use.