1. You can't run a .Net application without the Framework. The Framework comes with Windows 2003, which is more recent than Windows XP. At this point, the only thing you can do is install the Framework.
If you were just trying to avoid the user needing to go out and download the .NET framework, you can provide a "bootstrap" version of your software. To do this you'll just have to modify your distribution files to install the .NET framework before installing your software i.e. change the "setup.exe" for your software to first install "dotnetfx.exe" which can be obtained from Microsoft.
2. Or, you can include all libraries in the exe file using a third party tool like
Thin Install.