I have only used this recently and am impressed with it. The question is if I connect a remote XP machine to my Win7 can I install software from my CD drive onto the other PC.
No, you cannot map a CD drive to the remote machine. You can however use the file transfer function in teamviewer to copy the files from the CD drive to the remote machine and then install from there.
I'd recommend ImgBurn (http://www.imgburn.com/) to convert the disc to an ISO at your end. You can then transfer the ISO and mount it using Virtual CloneDrive (http://www.slysoft.com/en/virtual-clonedrive.html).
Thanks Mike, I managed to sort it anyway, been a member now for a while and still don't now how to mark something as resolved.