What is the best way to create a local admin account in windows XP?

When you say "'local admin account" you mean the account that the owner of the computer logs in under?
The initial admin account is set up automatically when start the computer for the first time, though if you'd like to add admin account to your computer do this:

Go into My Computer and go into your control panel.
In your control panel, select User accounts and click "create new account".
Type in the name of the new account and click next. It will then ask you what the account type you'd like the new user to be. Make sure it's set as "computer administrator". Then just hit create account and you're all set. :)

Hope I've answered your question.