How to disable USB Mass Storage device in XP
This hack will disable access to the usb flash drive
also known as usb mas storage drive ( also usb hard
disks but not sure as I don't have one).
Goto start > run > and type in regedit and press enter.
This will open registry editor window. Now go to the
following key:

HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Servic es\USBSTOR

Right click on the key and select export and save a backup copy in case
anything goes wrong. Now on the right pan of the regedit window double
click on the value called Start & set it value to 4 & click OK.
When you need to use your USB mass storage drive just change the value of
Start to 3.If you're too lazy just copy & paste these codes into a notepad
file and save it with a .reg extension.
code for Disabling access to the usb mass storage drive :
REGEDIT4

[HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\USBSTOR]
"Start"=dword:00000004
code for enabling access to the usb mass storage drive :
REGEDIT4

[HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\USBSTOR]
"Start"=dword:00000003

Boot Windows XP from a USB ThumbDrive

Many a time, viruses or malware can leave your PC in poor shape. In some cases, the hard-disk’s boot sector itself might be affected, resulting in a PC that cannot startup. However, with Handyman to the rescue, you don’t need to fear! Here we show you an easy way for you to create a Bootable Windows XP USB ThumbDrive.
On the hardware side, you need a fairly recent motherboard (most PC’s bought in the year 2005 or later, should be just fine). Update your BIOS if possible. Make sure you have an empty, sizeable USB ThumbDrive beside you (if not, just give the Handyman contest a shot!). On the software side, you need an unmodified Windows XP SP2/SP3 installation CD (preferably a CD with Windows Server 2003 and Service Pack). You also need to install BartPE. Please read this entire description fully before starting to actually implement the below steps.

Step 1: You need to create a special set of windows files (called PE) to be able to run the OS from a ThumbDrive. Start BartPE, and mention the drive letter where you have the Windows XP CD. Ensure that the “Create ISO Image” and the “Burn to CD” options are not selected. Click the “Build” button to generate your PE files.

Step 2: Get the boot files for your OS from c:\pebuilder3110a\BartPE\i386 (assuming that you installed BartPE to c:\pebuilder3110a\). The files you need are - setupldr.bin and ramdisk.sys. Create a new folder called “srsp1” in c:\pebuilder3110a\ and copy both of them into that folder.

Step 3: Format the ThumbDrive and make it bootable. To do this, open a Command Prompt, go to the folder c:\pebuilder3110a\ and run this command (assuming your thumbdrive is at G:) pe2usb -f G:

Step 4: Now just copy the entire PE files to your thumbdrive (from c:\pebuilder3110a\BartPE).

Step 5: Go into your PC’s BIOS and set the boot priority such that the ThumbDrive boots first. The hotkey to access each computer’s BIOS may vary, but it is usually [F1], [F2], or [Delete].
The BartPE utility is used because Windows Setup is not designed to install Windows to a flash drive, and therefore have to configure Windows using an alternate method. It is designed to create a build of Windows that does not take up as much space as a full blown installation. The above sequence of steps will give you a basic Windows GUI, with access to a file manager through a menu. For more enhanced functionality, you’d want to use the XPE plugin. To use it, extract it into the plugins folder of BartPE, and then while running BartPE, click the button that says “Plugins”, enable the plugins that you want, and come back to the main screen of BartPE.

Note that BartPE will work with Windows Server 2003 as well, but cannot use a Windows Vista disc as a source.