What you need
– PeToUSB
– Copy of Windows XP
– 1GB USB flash
1: Put your Windows disc in your drive.
2: Insert your USB flash.
3: Load PeToUSB
4: Configure it with your sources and destination like this
5: Click start
6: Once it’s finished remove the USB flash and insert it into your EEE PC. Set the BIOS to boot from the USB flash.
7: Watch it install!
Ps. @ Windows7 you must manually format the stick to FAT32 and run the software as aministrator
Source: http://netbooks.modaco.com/content/msi/261632/installing-xp-via-a-usb-stick/