How to Setup Windows XP from USB drive?

Step1: Prepping BartPE:

First we’ll prep the USB drive we’ll be using for booting. This is by far the largest step in the process, though it shouldn’t be difficult for anyone to follow. It requires a functional Windows system.

1. Download BartPE builder from http://www.nu2.nu/pebuilder/
2. Install BartPE. We’ll be assuming that you install to C:\pebuilder.
3. Start PE Builder from the Start Menu. Point "Source:" to the location of your Windows XP setup files containing SP3.
4. Make sure the "Output:" is set to "BartPE". 
5. Set "Media output" as "Create ISO image" and filename as "c:\pebuilder\pebuilder.iso".
6. Hit "Build". 
7. When it's done building, image file "c:\pebuilder\pebuilder.iso" should be created properly.

Step2: Create XP Bootable USB Drive:

How to Setup Windows 7 or Windows 8 from USB drive?

Step1: Create Bootable USB Drive:

1. Start PowerISO (v4.8 or newer version, download here).
2. Insert the USB drive you intend to boot from.
3. Choose the menu "Tools > Create Bootable USB Drive". The "Create Bootable USB Drive" dialog will popup. If you are using Windows Vista or Windows 7 / 8 operating system, you need confirm the UAC dialog to continue.
4. In "Create Bootable USB Drive" dialog, click "..." button to open the iso file of Windows 7 or Windows 8.
5. Select the correct USB drive from the "Destination USB Drive" list if multiple USB drives are connected to the computer.
6. Choose the proper writing method. "USB-HDD" is recommended.
7. Click "Start" button to start creating windows 7 / 8 bootable USB drive.

If no errors occurred in the above process, you should now be all set to setup Windows 7 / 8 from USB drive!

Step 2: Configuring the BIOS: