xp is an odd os, they essentially removed dos, though the prompt is still there, many feature were returned after SP2, but not all, even though the prompt recognizes them.
Be sure you are using xcopy correctly:
the flags /s and /e are redundant, only /e is needed to copy all directories, also there should be a space between source and destination:
C:> xcopy C:\ E:\ /e/h
i believe this will work