Try using a pen plotter.  I've used them with thin cardboard and
overhead transparency sheets.  They seem to run $1-50 on eBay.  Check
out models Hewlett Packard 7475A, 7550A, 7470A.  They can plot up to
10+ inches by 16+ inches and have a same-pen resolution of 0.1 mm.
I recommend the 7550A or 7550A Plus as its pen speed can be controlled
from 1 to 80 cm/second.  It's quite a bit larger than the others due
to its sheet feeder.

An alternative is a computer controlled X-Y table with a fixed table.
The media is stationary and the tool (or pen) moves.  There are hobby
versions but they generally have small work areas.

You can find plans to build one yourself.  They are not terribly
expensive that way.  I once built one from a boat builder's plans that
cut 4'x8' sheets of plywood -- that's another thing!  You can use a
cutting tool, such as a Dremel(Tm), with an X-Y table to cut the media
instead of just plotting a template if desired.  Commercial X-Y tables
with laser or water jet cutters can be obtained from used industrial
equipment suppliers, but most would be very expensive.

While there is a Windows Driver for the HP7550A Plus for Windows 2000
and earlier, I don't know if one ships with Windows XP.  You may
need some software to a take a Windows print file and convert it to
a suitable language or coordinates for the X-Y table, such as DXF
(AutoCAD) or IGES or whatever language the software controlling your
table understands.  There is raster-to-vector software available that
may be part of the solution.

Jim Divoky