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The answer is "yes", but that may not help you, depending on what you're attempting to do, and what computer you have.
It's not Windows you should be concerned about. It's your PC.
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Windows can certainly boot from a CD-ROM. In fact, that's pretty much what happens when you install Windows from a CD-ROM. You boot from the CD-ROM the setup program runs and it installs Windows.
What's more important is knowing whether your computer supports booting from CD-ROM. Most contemporary PC's almost certainly do, but older machines quite often don't include the support necessary - they'll only boot from a floppy, or from the hard disk.
Even if your computer does support booting from CD-ROM, some are not configured to enable that support by default.
The way to tell if you computer supports it, and to enable it if it does, is to boot into the BIOS setup for your computer. Exactly how that's done will vary from one computer to the next, but it's typically done by pressing one of the function keys at the beginning of the boot process, before Windows starts loading. Once in your BIOS setup, you can look for, and alter, boot options. That'll include which devices the computer will look to boot from, and it what order it checks. If "CD-ROM" is included, and it's looked to before the hard disk, then you should be good to go.
Creating a bootable CD-ROM is another story. Windows doesn't really include support for creating a CD-ROM that you can boot from. A popular set of tools for creating a bootable CD-ROM is called Bart PE, for "Bart's Preinstalled Environment". I'll warn you that it's not for the faint of heart - it's targeted at the more technical user.
Related:
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Ask Leo! - I don't have an installation CD for Windows XP - what if I need one?
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Ask Leo! - Why doesn't my CD-ROM work?
Article C2443 - October 23, 2005
To everyone above having issues with the WinXP install disk skipping over the boot from CD option and going back to the HDD and loading the OS, try it with a wired keyboard. I've been having the same trouble tonight, and have noticed my wireless reciever is active during the BIOS boot screen, but then goes dead again until windows loads...I won't have a chance to try the solution until tomorrow, but I'm pretty sure it's it.
Posted by: Kirk at November 27, 2007 12:44 AM@Kirk: I would likely to know whether you succeed on the method. however, can you figure out other way to resolve particular issue for a laptop user? Or shoud they change they keyboard to wired keyboard too?
Posted by: ferdy at February 12, 2008 2:35 AMI'm one of these misfortune can't-boot-from-cd user. your response will be very useful for me, at least.
@M. Leo.: Merci beaucoup pour "le forum"
I think windows XP home doesn't concern with possibility of wether or not booting frm CD, It's a machine that support, However i spent 6hrs trying to install OS but i fail to boot from cd,even if i followed the above instruction but still i fail.
Posted by: Lusako at April 25, 2008 7:33 AMInclude this non-cd boot w/bios set-up to cd 1st boot priority in WinXP Media Ctr. O.S.
Posted by: Richard W. at December 4, 2008 2:58 PMPrograms such as windows mem.test mtinst.exe will
not boot from reboot or cold boot up.
Also any other app such as rescueBoot Up CDs.
with hard wired keyboard.
Does anyone have a work-around for XP MCE ?
I don't see the answer for the people who commented here. I did change the boot set up so it goes to read the CD first, but XP still loads anyway. That is a big deal for a lot of people it seems.
Any resolution ?
Posted by: Lad at January 26, 2010 12:36 PM