Is there any free (not trial) software by which we can run android on windows xp PC?
I have search and found this http://youwave.com
However, it is trial for 7 days
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You can try LiveAndroid. It's around 180MB and comes as an ISO file. Create a virtual machine in your Windows Machine and load the ISO to boot the VM into Android.
You can download Android SDK for free from Android Developers website. The SDK includes an emulator or all major versions that have been released. The emulator can run any Android applications that doesn't require specific hardware (e.g. GPS, Accelerometers). Graphic intensive applications (e.g. games) could be slow though, unless you have a very, very powerful PC.