Just rebuilt another laptop with Win XP SP3. this one has an inbuilt parallel port and the Driver Test now gives me a nice almost distrubance free line. Today I'll try moving the X axis but am really keen to see what settings you are using. Can you please confirm what all you are using in your conversion.

Mine is a Super X1 (short X table). CNC fusion kit, 1.8Nm Motors and MSD542 from MCP.
Power Supply is a 40V 10A one and I'm using a Dell D800 laptop.