All you have to choose is the source and target drive. Make sure that the medium in the target drive has enough capacity for the data in the source.
If you have only one drive, you can select the same in both drop down boxes and CDBurnerXP will create a temporary image on hard disc. When this is done the source disc will be ejected, and you will have to insert the empty disc in your drive. Also make sure that there is enough space left in your hard drive. You can also use your hard disc as target drive, then an ISO image of your CD/DVD will be saved to the location you (have to) enter.
With CDBurnerXP, I'm afraid, you can't. In fact, you need special hardware to even read those discs. All details can be read here: http://www.thegameforum.com/nintendo-wii-general-discussion/2464-step-step-guide-copying-nintendo-wii-nintendo-gamecube-discs.html
This article applies to version 4.0.027 or higher.
In older versions of CDBurnerXP the selections are somewhat different, since it has been redesigned. To access the copy dialog select File → Copy ISO disc.