TechRepublic's Bill Detwiler maintains that booting Windows XP from a USB Flash drive ahs its advantages when you need to troubleshoot and boot a almost dead PC.
Here's a video walking you through the process. You'll learn how to configure a computer's BIOS to boot from a USB drive, how to download and use the free software to create a bootable drive, and how to installed Windows XP on the drive.
Bill's blog also has illustrated walkthroughs and tutorials. Here's a look at the video: