How do I install XP on laptop?

I have a non-OEM serial key for XP.

I am tech savvy but can't for some reason figure this out.

I have a:
80GB 2.5GB HDD that plugs into the computer. Completely wiped, blank.
16GB and 2GB USB flash drives. I'd prefer to use the 16GB only if I have to.
Dell Inspiron 1501 laptop (this is what I want XP back on, but the DVD drive is broke)

What I've thought of doing:
Getting a USB DVD tray (does that exist?) and installing from there. The default DVD tray broke.
Also thought of using this to an awesome advantage: I also burned my disc to an installable/boot able .iso file.

Why or how I don't have an OS on this laptop (doesn't really matter):
So... My friend thought it would be HILARIOUS to wipe my crappy 80GB HDD for my laptop, thus erasing the OS. Well, it has no warrant and I need one for a re-install of my OEM. I have no install disc that came with. I then bought a Win XP CD and he's getting fined.
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