MY OWN EXPERIMENTATION
The problem was that my CD-ROM was not functioning. Therefore, I couldnt boot from the Windows XP bootable CD. I did think about copying the file from the XP cd to my pen drive and boot from my USB pen drive. But how can I boot from my USB pen drive when the pen drive itself was not bootable? Thats a few months old story.
Having a bootable USB is very essential, especially if you are a Netbook user. Using bootable USB to install an operating system (OS) not only makes the installation faster, but also saves a DVD.
Creating or using an USB drive to install Windows operating systems is very easy if you follow the below mentioned steps.
bootable usb drive { PEN DRIVE USED}
Coming back to bootable USB guide, here we assume that you are using either Vista or Windows 7 to create a bootable USB.
1. Insert your USB (4GB preferable)
2. Open elevated Command Prompt. To do this, type in CMD in Start menu search field and hit Ctrl + Shift + Enter. Alternatively, navigate to Start > All programs >Accessories > right click on Command Prompt and select run as administrator.
3. When the Command Prompt opens, enter the following command:
DISKPART and hit enter.
LIST DISK and hit enter.
Once you enter the LIST DISK command, it will show the disk number of your USB drive. In the below image my USB drive disk no is Disk 1.
4. In this step you need to enter all the below commands one by one and hit enter. As these commands are self explanatory, you can easily guess what these commands do.
SELECT DISK 1 (Replace DISK 1 with your disk number - IN MY CASE I USED DEFAULT THAT IS SHOWN)
CLEAN
CREATE PARTITION PRIMARY
SELECT PARTITION 1
ACTIVE
FORMAT FS=NTFS
(Format process may take few seconds)
ASSIGN
EXIT
Bootable USB
Dont close the command prompt as we need to execute one more command at the next step. Just minimize it.
5. Insert your Windows DVD in the optical drive and note down the drive letter of the optical drive and USB media. Here I use D as my optical (DVD) drive letter and H as my USB drive letter.
6. Go back to command prompt and execute the following commands:
D:CD BOOT and hit enter. Where D is your DVD drive letter.
CD BOOT and hit enter to see the below message.
BOOTSECT.EXE/NT60 H:
(Where H is your USB drive letter)
USB Bootable
7. Copy Windows DVD contents to USB. { SEE INSIDE EVERY FOLDER IF ANYTHING IS NOT COPIED}
You are done with your bootable PEN DRIVE. You can now use this bootable USB as bootable DVD on any computer that comes with USB boot feature (most of the current motherboards support this feature).
Note that this bootable USB guide will not work if you are trying to make a bootable USB on XP computer.
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Method 2 - Try these 2 USB Flash Drive Utilities by HP/Compaq. They work with Most other brands of flash drives as well.
hpflash2.zip HP USB Disk Storage
Format Tool. Formerly called hpflash1.zip
HP Drive Key Boot Utility Version 7.41
Download
"I would put a little extra in there." Says a fan who emailed me with no name

For the downloads section I use nLite to make and create the image file as you can import the service packs and do some tweaking to the install files.
http://www.nliteos.com/download.html
1. Install the HP USB Disk Storage Format Tool and run the program.
2. Select the Device and the File system from the drop down menus and click start.
3. Close the above program and install and run the HP Drive Key Boot Utility. Selecting the appropriate drive letter. Click Next.
4.Select the circle on the top that says create New or Replace Existing Configuration. Click Next.
5. Select the circle labeled Hard Drive. Click Next.
6. Select Create New Filesystem. Click Next.
7. Select the circle labeled HP Firmware Flash Package. Click Next.
Click Finish