XP is a refined version of 2000, with better compatibility for older software. The only downside is lack of native hardware support but the OS has been out long enough now that there are plenty of drivers available. XP comes in two flavours home and pro, and given the choice I'd go with pro; it has much better security features than the home version. The only problem with your friend installing these is that XP uses a little anti piracy technique called product activation. I won't bore you with the details but here's the link.
http://www.microsoft.com/piracy/basics/activation/
Unless your friend has a corporate version of XP then the chances of you being able to use it are slim and none, if your friend has already activated it even once.
Bottom line: Go with XP Pro. I've run many software titles from as far back as 97 with no problems which I can't say for my 2000 machine. Just make sure your hardware is up to the task.