Just what I needed Thanks! For anyone else looking to boot an XP setup from USB the answer is to get and run Win To Flash from Novicorp http://wintoflash.com/
This works for all versions of Windows from 2000 and later from what I can tell... including Win 7 and Win 8 but those have easy official tools its the earlier OS's that this is perfect for.
Thanks Tomatthe for pointing me in the right direction finally after nearly a week of banging my head against one wall after another!
Check out the Link for the turorial below if you have questions about this process it was very informative as well.