Pkg xen devel - Jul 2012 - Bug#630175: ballooning with windows xp?

I'm not sure what is going on here but I happened to notice that you
have maxmem > memory (specifically memory = 2048 & maxmem = 4096).

This requires a balloon driver in the guest and for unmodified guests
such as Windows requires the use of PoD to bridge the gap between boot
and the driver getting loaded. You don't mention which drivers you are
using, but the bug is likely to be in them.

Thanks,
Ian.