Hi Maxima00
There are a few guides for installing Windows XP
onto a USB flash drive (which includes making it bootable), but very few on how to install Windows XP
from a USB flash drive. [And... am I correct that your question concerns using a USB flash drive (often also called a "pen drive" or "USB key") - or are you asking about an external USB hard drive?] ... In case you want to look at a guide for installing to a USB flash drive, Tom's Hardware has a well-written one ---
http://www.tomshardware.com/2005/09/09/windows_in_your_pocket/
I haven't found a definitive answer for how the XP installer behaves when started from a USB flash drive. But I have found several references to situations where it's possible to make a USB flash drive bootable (you use a special utility to format the USB flash drive in the older FAT [FAT16] format, then place the necessary bootable system files on it -- basically creating a very big USB floppy diskette - as the 'system' is usually DOS 7). Here's the PCstats guide for making a USB flash drive bootable ---
http://www.pcstats.com/articleview.cfm?articleid=1676&page=1 --- (It's the first guide in that set of projects in that article -- please note that the link to the HP utility for formatting the USB flash drive no longer works, but you can try one of these ---
http://h18000.www1.hp.com/support/files/serveroptions/us/download/23839.html ---
http://www.bootdisk.com/pendrive.htm)
I would guess that, once the USB drive is made bootable (rather like a big floppy), you could copy the contents of an XP SP2 installation CD onto it & see if it works (I imagine you might be able to find a setup file) -- of course you'd have to make sure that the target drive to install XP onto is the hard drive in your laptop.
And, just in case you're curious - here are some standard optical drives that you'd likely be able to replace your dead CD-rom with --- if all the other parts of the interface are still OK (in other words = if the CD-rom was the only thing broken: if the port is still good, the motherboard isn't damaged, etc -- )
NEC 8x internal slim DVD burner (for laptops) $67
http://www.newegg.com/Product/Product.asp?Item=N82E16827152073
Sony internal slim CDRW/DVD-Rom "combo drive (for laptops) $43
http://www.newegg.com/Product/Product.asp?Item=N82E16827131045
I'm curious to hear how it turns out -- there seems to be a growing interest in this sort of thing, judging by the number of threads on the net. But surprisingly few reports of success or failure for using the USB flash drive as the source drive for installing onto a laptop hard drive.
. . . Gary