I wanted to do a clean reinstall on my Windows XP Home Edition but is it possible to backup the windows updates such as burn them in a cd and reinstall them after finishing the clean install on XP? Because it takes a long time to download those updates specially when using dialup.

of coz...

That'll only work if you've manually downloaded each and every update.

You could try my approach which I did on my dial-up after reinstalling WinXP:
1. I first installed Windows XP Pro, and then I installed Windows XP Service Pack 2 which I had archived on a CD, and then all Microsoft software such as Office, etc.
2. I went to Microsoft Update and let it download all the updates while I was sleeping. When I woke up everything was downloaded and installed.

I customize my xp installation using nlite i also use RyanVm's Update pack which is a collection of all post sp2 hot fixes. As you are installing xp fresh you could just use nlite to integrate sp2 if you haven't already got a xpsp2 disc then integrate ryanvm's update that way when you install xp it is already up to date.

okay!! Thanks guys.