Don said:
The word "slipstreaming" was originally used to refer to the practice of
many software manufacturers of including updates to their product on the
distribution CD without any real announcement of what they were doing or
differentiation of the various kind of CDs. It was always a disparaging term
because it was poor practice. It was used as a way for the manufacturer not
to have to print a different box, manual, etc. for the updated version, and
to sell older stock that didn't appear to be outdated, but actually was.
That saved them money, but it left the customer unable to tell whether he
was buying the new version or the old.
Somewhere along the line, people started creating their own updated versions
of some software, by merging the update files with the original CD. Someone
got the bright idea to call it by the same name "slipstreaming," without
realizing that the name was originally used in a disparaging way.
The term stuck. I dislike the use of the word this way, but the original
meaning has been lost, so I long ago gave up trying to fight it. Since
everybody now uses it simply to mean a version with the upgrade incorporated
in it, I reluctantly go along.
So these days a slipstreamed copy of XP simply means an installation CD that
you've made yourself that incorporates an upgrade, such as SP2.