While xp_regread read values from registry under exact path specified. To read instance specific registry entries from registry you can use xp_instance_regenumvalues and xp_instance_regread.

xp_instance_regread translates the given path to instance-specific path in the registry:

for example, executing following code against a SQL 2008 Instance returns the default database location which is specific to that instance:

-- © 2011 – Vishal (http://SqlAndMe.com)
 
DECLARE @returnValue NVARCHAR(500)
EXEC   master..xp_instance_regread
       @rootkey      = N'HKEY_LOCAL_MACHINE',
       @key          = N'SOFTWARE\Microsoft\MSSQLServer\Setup',
       @value_name   = N'SQLDataRoot',
       @value        = @returnValue output
PRINT @returnValue

this returns:

C:\Program Files\Microsoft SQL Server\MSSQL10_50.MSSQLSERVER\MSSQL

Now, if I execute the same code against a SQL 2005 Instance on my system, it returns:

C:\Program Files\Microsoft SQL Server\MSSQL.2\MSSQL

If the key path cannot be translated to instance-specific path, it will read from the specified key path.

Hope This Helps! Cheers!