Transfering files is no problem.. it's as simple as Copy/Cut file folders and Paste them on the new Hard Drive...
If you want to transfer your Windows XP to the new hard drive, create an OS image with a cloning program such as DriveImage XML (it's free for private use) and before installing the XP Image on the new Hard Drive: Go to My Computer-right click and select Manage \ Disk Management \ right click on the new Hard Drive (first partition [Primary] if you have partitioned it), and select Mark this partition Active)... Next install the Image on the new hard drive using the same program you created the Image with.
Next remove the old Hard Drive and start the computer... the installed XP Image may or not boot... if it doesn't, boot it in in Safe Mode-(F8 right after the BIOS Post), so you can install compatible HD drivers, and try again in normal mode... If it still doesn't boot, you can repair-reinstall the newly installed XP Image... The installed programs should run without anything else done. Since you'd be running the OS on the same computer cloning the OS won't violate the Microsoft EULA Agreement.
DriveImage XML V2.44
http://www.runtime.org/driveimage-xml.htm