Here is one way of doing it:
1. On the taskbar, click Start, and then click Run.
2. Enter the following:
net stop spooler (and hit enter)
3. Delete all files in the following folder:
C:\Windows\System32\Spool\Printers
4. Once the spool files are deleted, start the spooler again:
net start spooler
A second way:
What you want to do is going into >Start>Programs>AdmininstrativeTools>ComponentServices.
Then select the Services option on the tree, and scroll down to Print Spooler. Select it, and choose Stop.
Then go into My Computer and go to your primary drive where XP is installed and navigate to the systemrootdirectory\system32\spool\printers. Usually the systemrootdirectory is \windows, but it might be something else. On my system, its \windowsx and there is a \windows directory which was an old installation, so be careful. Once in that directory, delete all the .shd and .spl files. Don't delete subdirectories.
Then go back to Component Services and restart the print spooler. This should empty the queues and allow you to delete any printer that you needed.
Source: http://www.northeastfoto.com/forums/archive/index.php/t-4436.html
This solution is for windows 2000, put may also work for windows XP:
http://support.microsoft.com/kb/216221
http://searchwincomputing.techtarget.com/tip/0,289483,sid68_gci1039959,00.html