Jumping cursor while using skype messenger or yahoo mail composer
Skype and other Video or Voice over the internet do requires CPU computations heavily. And this is why cursor movements jumps insteads of moves. Those software used more CPU power than the Touchpad.
To prove this is the case, try use Skype Voice call and see how jumpy the cursor is, then try Video Call and compare how jumpy. If Video call jumps a lot more than Voice then this is the case that the CPU is overloaded. Try reduce as much as possible the visual effects of Skype and Windows XP. By the way, software Antivirus and Firewall may also contribute CPU overloading during use of Skype.
Either improve your laptop hardware (add more ram, etc.) or get your XP tuned up to improve performance.