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An alternative method can also be found at http://www.liliputing.com/2008/04/install-windows-xp-on-mini-note-usb.html
If you get the "NTDETECT failed" error it may mean that your USB stick has no partitions on it. This happened when I zeroed out a usb stick in Linux and then let Windows XP format the drive. Windows does not create partitions on removable usb stick drives and thus wrote the filesystem to the raw device with no partition table. It would boot, but BartPE could not load. This is also a common cause of a BIOS being unable to boot the stick. Many are hard coded to look for a primary partition (or some even a special 4th partition).
Here is how you can fix the usb stick drive: