For XP/2000 go to Start -> Run. Type "cmd" in the box and hit enter for a command prompt window.
A .xor file is a file you need to XOR (exclusive OR) against the original firmware, which means it's a file that consists of the changes made to the original firmware. The author of the dakotatools releases this file due to possible legal liability if he releases a complete hacked firmware.
Basically, you need to download the original firmware from the camera, XOR it with the provided .xor file using the utility provided, and then upload the resulting file. If you're not familiar with using a command line interface, I'll be happy to walk you through when if I have the time.