Installing Windows XP from a pen drive using native Windows commands is extremely hard and requires a lot of knowledge about batch scripting. The easiest and most convenient way to install Windows XP from a pen drive, is to use a 3rd party application that was created to come in need for all users. The software in discussion is WintoFlash (it's listed on our website for downloading). The software runs without installation to disk. You just extract the content of the archive to a folder and run
Wintoflash.exe. Make sure you have a Windows XP installation disc nearby because you'll need it.
Upon starting the software you will be asked how to do the task: in expert mode or with the help of a wizard. The best and most convenient way is to choose the wizard way. After this step you'll be presented with 2 fields: one where you choose the path to your USB Pendrive and another one with the patch to your Windows installation disc.
Select the corresponding ones and click Next, read and accept the agreement
and move to next step. The software will transfer all the files needed for installation and make the pen drive bootable. After this process, restart the computer, chose Boot options and pick the Hard-disk option and on the next screen you'll have the possibility to chose the corresponding drive which in this case is your removable media. The next screen will ask you from which step you should start and in this case with 1st one. After setup completes, boot again from the same removable media and chose the 2nd option and follow the rest of the setup that Windows XP setup prompts.