If I'm not mistaken, it's not possible to boot up to XP on any
portable devices. Because portable devices drivers are loaded only
when you plugged it in. You can however, create a bootable XP disc
image on a portable device. Bootable doesn't mean installable and
usable.
Windows does load USB drivers, but only after the computer boots
up. If you use a USB optical or laser mouse, you will know that.
The USB mouse don't work until the computer has booted up, right
before you log in.
This irritable feature is finally available in Vista.