It sounds like the standard method used by HP when they deliver a professional system. The CD has actually got a lot more on board than the standard Microsoft XP Pro because HP also include a whole pile of their own software so that should you need to start from scratch you have most of what you need already on the CD.
The important bit as far as slipstreaming is concerned is the i386 directory. If you are still keen on doing it I would copy everything of that HP CD, EXCEPT that special HP directory, to another CD and then use that for your slipstreaming.
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Do you know that we're all in line for succession to the throne? Really?
Well, if forty-eight million, two hundred thousand, seven hundred and one people died I'd be Queen.