The XO laptop is one step closer to having Windows XP as an operating system option, as Microsoft has now released to manufacturing the highly-modified suite. According to Microsoft, they are hoping for an official release in September. This puts the release of the XO version of XP well over a year after the release of the machine, showing that Microsoft did indeed face issues in slimming down their software enough to function.
Clearly they've gotten over those hurdles. They do mention that already deployed XO's won't be eligible to receive a copy of XP. The XO is apparently doing well, along with OLPC, despite internal criticisms and other issues.