I previously wrote an article Install Windows XP from USB. That process allows you to create Windows XP Bootable USB Drive, exactly the same as the XP installation CD. To make the whole process working for you just have a PC/Computer/Laptop with CD/DVD Rom(should have Windows XP as the host OS). Once you make your USB drive ready to boot Windows XP from it, you can use it to install Windows XP at any computer [Also read how to Install Software Into USB Drive].
Note: This process is quite complex but have a better result than the above one.
This procedure allows you to build a bootable USB drive which acts exactly same with the XP installation CD. To make the whole process successful, you need to have a PC or Laptop with CD or DVD Rom. After going through some steps you can make your USB drive ready for booting Windows XP from itself and then you can start the installation of Windows XP from that removable disk at any computer. Follow the step-by-step guides.
1. Manage to get a USB drive with at least 1 GB memory.
2. The file XP_FROM_USB.rar from the link below:
Update: You should have XP installed computer for this process.
1. Extract the XP_FROM_USB.rar archive in a folder named Softslas(Say) in C: drive. Now navigate to C:>Softslas > PeToUSB and double-click on the file peToUSB.exe.
2. A window appears like this:
Set the following values:
- select “USB Removable as Destination Drive”.
- select “Enable Disk Format”.
- select “Quick Format”.
- select “Enable LBA (FAT 16x)”.
Finally, put XP-Softslas (or whatever you want) as Drive Label and click Start.
A message appears and click Yes.
Another message box appears again. Click Yes.
Immediately after that, the USB disk will be formatted. Wait for a few seconds and then click on “Ok” and then “Close” button.
3. Open the Windows command prompt by typing ‘cmd‘ at the ‘Run’ box. The cmd.exe console appears.
- Here, type the following syntax and hit the Enter button from your keyboard.
- Again, type the following command and press “Enter”.
bootsect /nt52 I:
- Type “cd..” and press “Enter” and also type cd usb_prep8 and press Enter.
- Type ‘usb_prep8′ and press “Enter”.
4. Press any key to continue.
Now the command prompt window will look like this.
Prepares Windows XP LocalSource for Copy to USB-Drive:
0) Change Type of USB-Drive, currently [USB-stick]
1) Change XP Setup Source Path, currently 
2) Change Virtual TempDrive, currently [T:]
3) Change Target USB-Drive Letter, currently 
4) Make New Tempimage with XP LocalSource and Copy to USB-Drive
5) Use Existing Tempimage with XP LocalSource and Copy to USB-Drive
F) Change Log File – Simple OR Extended, currently [Simple]
Enter your choice:_
Insert the XP installation CD in you CD or DVD ROM drive and in command prompt window:
- Type 1 and press “Enter”. A “Browse For Folder” window will appear and here select the CD/DVD drive and then click OK.
- Similarly, for the choice field enter 2 and if there assigned the letter “T” for your computer then change it otherwise do not alter it. After typing 2 in the choice option it will prompt “Enter Available Virtual Drive Letter”. Here, type a letter that is not any drive letter of your computer. Let us say S is not a drive letter in your computer. So put S then press “Enter”.
- Now it will get back to the Command prompt and then type 3 where it prompts for the choice. It prompts: “Please give Target USB-Drive Letter e.g type U”. Put your USB drive letter and press “Enter”. Here, my USB drive label is “I” so I put “I”.
- Again, input 4 and press Enter. It creates the new temporary image and makes a copy of it to the USB Flash Drive.
Now you should wait for a few seconds and then follow the steps below.
- A warning message will appear like this:
“WARNING, ALL DATA ON NON-REMOVABLE DISK DRIVE T: WILL BE LOST! Proceed with Format (Y/N)?”
- Type Y and press “Enter”, you will get the message Please wait………..
- After completion of the formatting process it will prompt: “Press any key to continue”. Hit any key to continue which makes you waiting for another session: Please wait………..
- The “Press any key to continue” appears again. Just do the same.
5. Once everything go in the right way, a message box will appear showing:
“Copy TempDrive Files to USB-Drive in about 15 minutes = Yes OR STOP = End Program = No”
- Click “Yes”.
- After this a message box will appear showing “Would you like USB stick to be preferred Boot Drive U……………….”. Click “Yes”.
- Another message appears asking “Would you like to unmount the Virtual Drive ?”
- Click “Yes” and wait for some time and the press any key…………….
- Press any key again to close usb_prep8.
Now your USB drive is prepared for starting the installation process.
Starting the installation process of Windows XP from USB drive
1. Insert your USB drive in the USB port and Reboot your computer. When starts the computer enter in the BIOS Setup and set the first boot preference as USB Hard Disk.Now Save and Exit from the BIOS Setup. Your computer will again restart and the following screen will appear.
2. Now choose the TXT Mode Setup and follow the onscreen instructions. After completion of the partition process, formatting the hard drive and copying file the computer will restart again.
3. Choose the GUI Mode Setup option.
4. Wait for a while and your installation will be successfully completed.