Is it ok to replace XP Professional (a bad copy) that doesn't work on my laptop with XP Home edition?

Well since some of the programs aren't working, yes it could be a bad copy of Windows XP Professional. You can downgrade to Home Edition but its better to reinstall the whole things all over because it is a possibility that by downgrading it may corrupt your Home Edition as well. My advice is to do a fresh install of Home Edition. Well what problems are you encountering, maybe they are just simple problems that can be fixed. But if you decided already that it is a bad copy than just install Home Edition but a fresh installation.

I my opinion it is fine to "downgrade" but make sure that you completely format the hard drive and install a fresh copy of XP Home. You will notice some networking differences in XP Home but if you are a typical user it should not make to much of a difference. If you participate in domains and do a lot of net work mapping then XP Home might not be the best for you.

I Think If you have a genuine copy of microsoft Windows Xp Home The You Should Format and intall windows If the copy of win xp home is pirated then no matter upgrade it

yes it is possible and my suggestion is DO IT A.S.A.P. The one you received from your friend is more than likely pirated and that could land you with a lot of legal problems. Put in the instal CD for XP Home and it should start up the instal program automatically. If not, take it to a computer store and ask them about it.