The xcopy command does work. I don't think you can create a bootable USB stick in WinXP. Only Vista. At least I haven't been able to do it. It worked just fine for me in Vista. I made my flash drive bootable and copied the vista files from the DVD and now I have a bootable vista flash drive. I'm going to try to do the same with an ISO file on a cd of ShadowProtect. I hope it works. The instructions I found are these:
This operation assumes your machine can boot from a USB enabled device. Check your BIOS to make sure. You also MUST have a DVD copy of Vista to install the source files from the DVD to a USB flash drive:
1. Insert your USB flash drive and enter the following commands:
(please note this list assumes that your USB flash drive will be seen as disk 1. To confirm that it is type "list disk" after you've entered the DISKPART command) Otherwise you may wipe a different drive (such as your hard disk drive!)
select disk 1
At this point your USB drive is formatted. DO NOT format the drive from within Windows. You MUST have a DVD copy of Vista to copy the source files from.
create partition primary
select partition 1
The final preparation step is to copy the installation files to your flash drive, this can be done by running the following command:
(Please note D: is the drive letter for the source files and E: is the drive letter for your flash drive, if they are different on your system you need to change them accordingly).
Exit DISKPART. Type:
xcopy d:\*.* /s/e/f e:\
Thats it, configure usb device as primary boot device in your bios and install.
Making it bootable, if it is not
In the elevated command prompt, type F:\boot\bootsect.exe /nt60 H: and press Enter. (See screenshot below)
WARNING: Subtitute the letter F for your DVD drive letter (step 17), and substite H for your USB key drive letter (step 13).