Yes. The minimum requirements for Windows XP are a 233 Mhz Pentium, 64 MB of RAM, and 1.5 GB of hard drive space. Any Pentium III computer should have more than enough RAM and hard drive space.
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The official minimums for running Windows Vista are an 800 MHz processor and 512 MB of RAM. So some Pentium III systems would officially be capable. Whether or not you would actually want to is a different story.
I want to buy a laptop with windows 7 operating system and Intel core i3 processor. will this configuration support windows xp?
Yes. Windows XP was first released when the Pentium III was a fairly recent processor. Some of the last Pentium III computers shipped with Windows XP.