When Windows XP was released, USB booting was not a standard priority for operating systems. The OS was designed to load from an internal hard drive. When you try to simply install XP onto a USB stick, you will typically encounter the dreaded "Blue Screen of Death" (STOP 0x0000007B) because XP doesn't natively understand how to mount the system volume from a removable USB device during the boot process.
While Microsoft's official Windows To Go feature was only introduced with Windows 8, you can achieve a similar "portable" experience with Windows XP using third-party tools or Pre-installation Environments (WinPE). Microsoft Community Hub 1. The Modern Way: Hasleo WinToUSB windows to go windows xp