I am not sure what you are asking, but I think you will have to make your USB drive bootable and copy the XP installation CD to it or start the install from DOS?
307848 - HOW TO: Start Setup from MS-DOS in Windows XP
it doesn't cecessarily have to be bootable. you can invoke installation in command prompt. navigate to the usb disk drive where the install stuff is.
type winnt32
installation will initiate GUI and continue.
It might help you to understand how a CD becomes bootable, there is a bit more than just copying files onto it. That is why we are mentioning DOS as an alternative to making the drive bootable.
Also your bios has to be able to recognize the USB drive away from the Windows environment if you to want to start any install other than from a working Windows system.
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