To create the disk:
Go to startcontrol paneluser accounts. Select the account you are currently logged in as. Under the ‘related tasks’ heading in the top left corner, click ‘prevent a forgotten password’ to open the forgotten password wizard. Insert a blank floppy disk and follow the instructions to create your password reset disk.
To use the password reset disk in case of emergency:
Once you have created a password reset disk for a specific user, the next time the password for that user is entered incorrectly at the welcome screen, a message will pop up asking if you have forgotten your password. At this point you can elect to use your password reset disk. Follow the instructions to reset your password.
Note: There are a couple of possible problems with the above procedure. For one, if you have used Windows XP’s built in encryption feature to encrypt some of your files and folders, but have not yet updated to service pack 1, do not reset your password, as you will lose access to all the encrypted data. Once you have got service pack 1, it is safe to use the disk. Also, you cannot gain access to the reset feature if you have disabled the welcome screen on XP by using tip #31 above.
Keep your reset disk in a safe location, because anyone else can also use it to reset your password…