This upgraded digital device should work straight away under the updated windows XP system, so there is no need to install anything from the CD (some of the information on the printed sheet can be related to previous versions of the windows systems). Just plug the device into a USB slot, and then open "My Computer". You should see a camera icon on the hardware list. Double click that icon, you can see the image viewing window. This is what you see through the telescope. You can take pictures using the button located on the top-left manual bar of the computer screen.
For video recording, you can install the driver by following steps 3.4 & 3.5 of the User Manual (skip step 3.3). Note: if you use a laptop that has a built-in webcam, there can be a conflict between the existing software for the webcam and the new video driver you try to install. Check to see if you can share the webcam software with the digital eyepiece, or use a computer that does not have a built-in camera system (this is related to video recording function under Win XP only. You don't have this issue with Win 7).