Installing XP from USB can be done several ways. Here is a little program that makes it easy. Just place the XP install files in a folder and point to the folder with this little program. To download the GUI from the MSFN post, scroll down the page and you will see the Beta download referenced.
I had a MultibootISO from Pendrive Linux prepared USB drive with Puppy Linux on it. I ran this GUI and it added XP to the menu and copied the XP setup files to the USB drive. I tested it in QEMU with MobaLiveCD and it seemed to work fine as far as I went (which was to the format partition point). The setup is in the traditional 2 part XP install of other USB installs I've used but I don't remember the procedure exactly. I think the second part initiates automatically and I do believe you should not remove the USB drive until you see the XP desktop. I guess I will have to do some experimenting when I actually use it.
I'm not giving a link to the download in case there is a newer version on the site.
Why does anyone fool with XP when Windows 7 is so great? That is a good question. XP installs can be a little smaller I think. Mainly I had a request for it, so I did it.
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