read the following on how to install xp, it can be installed with a usb, but first must have an ISO of xp to burn to a flash drive with Rufus, also only the earlier versions of rufus work with xp.
Download RUFUS 1.20 from here (read some stuff on the page so you can know more about it):
http://rufus.akeo.ie/downloads/
I will caution you to be careful that you don't accidentally format any of your hard drives - be sure your USB stick is in and know what the drive letter is! This part always makes me a little nervous, so be careful.
Launch RUFUS and all the defaults should be okay, for the Device, choose your USB drive letter, Quick format, FAT32, label it if you want to and in the Format options box, click the little icon that looks like a CD and a window will open. Navigate that dialogue to point to the folder that contains the Recovery Console ISO that you unzipped earlier and the box should change to say ISO image .
Double check you have the right Device selected in the top (NOT you HDD) Click Start, acknowledge the warning and let it finish (it will take a little while) as it copies the files.
When RUFUS is done, it will say 'DONE' in the bottom.
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http://pcsupport.about.com/od/operatingsystems/ss/instxpclean1.htm
With pictures of clean install
http://windows.microsoft.com/en-US/windows-xp/help/setup/install-windows-xp
http://www.windowsxphome.windowsreinstall.com/sp2installxpcdoldhdd/indexfullpage.htm
http://www.blackviper.com/os-install-guides/windows-xp-professional-install-guide/
Clean installs of XP sites
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You would also want to slipstream sp3 onto your installation cd before burning
you will need Imgburn to create the iso and then use rufus to burn the iso to a usb
http://forum.imgburn.com/index.php?showtopic=11190
instructions on using imgburn above, below link download imgburn
http://www.imgburn.com/
