What you set for the printer properties was to send all of the printer commands as well as the text of the document to the file. Hence the "gibberish." See:
Two choices:
A. Use the XP Print command to send the file to an actual printer. It should print properly formatted.
B. And/or, set the print to file properties to specify a type text file:
1. Click Start, and then click Printers and Faxes.
2. Click Add a Printer, and then choose the following options in the wizard:
a. Click Local Printer.
b. Click to clear the Automatically detect and install my Plug and Play printer check box.
c. Click Use the Following Port, and then click FILE (Print to file).
d. Click Generic in the Manufacturer box.
e. Click Generic / Text Only in the Printers box.
f. Name the printer.
g. Click Do not share this printer.
h. Click No when you are prompted to print a test page.
3. When you click the printer in the Print dialog box, Windows prompts you for a file name.