If you've only got the basic Windows drivers installed right now, then you should be able to just install the newest drivers, and when the system reboots you're good to go.
How exactly you do driver updates depends on how the drivers and hardware function. In this case, WinXP has native drivers for the Live! soundcard, so if it's installed in the machine, Windows will automatically install the native drivers (though you can cancel it if you're fast enough, just close the "detected new hardware and installing the software for it" popup on the systemtray when it comes up, and you should then have no drivers being installed.
If Windows doesn't have native drivers, like for a GeforceFX card, then it will do one of two things. First, it will try to use the standard driver for the device, if it has one (like standard VGA port). If a brand new sound card came out today, there wouldn't be any drivers available, and there wouldn't likely be any generic drivers that would work with it either.
If Windows doesn't have any native or generic drivers, it will stop during the boot and ask what you want to do with the new hardware. In some cases, this is great, in others, it's not, and it's because Microsoft doesn't seem to have reached the point that it's willing to dictate to software/hardware makers that they MUST comply with a standard way of installing.
Creative for instance, uses a driver install package that only installs the drivers you need. You are supposed to run the install without the sound card attached, but sometimes that isn't possible. Then during the reboot with the card installed, the newest drivers are used automatically.
Nvidia does almost the same thing, they provide a single install package, but they also copy all the compressed files to a single directory, so that later on, copies of all the drivers are right there.