In this new age of portable apps, and running software on USB sticks, it is possible to even run a virtual machine version of MS Windows XP on a USB stick. However, you’ll probably want to remove some of the “bloat” of your Windows XP installation, to reduce the file size of your O/S. A Windows XP installation can be reduced to ~600MB (~375MB if you’re willing to forego Internet Explorer).

To do this, there are 2 great apps available, nLite and XPLite. The main difference between the two is WHEN they are run.

NLite (http://www.nliteos.com/) is run before Windows XP is installed. It loads all of the installation files from installation media (CD), and lets you pick and choose which ones you want to include in your installation.

XPLite (http://www.litepc.com/xplite.html) is run after Windows XP is installed. It lets you remove unwanted items from your installation, which will reduce the “footprint” of your install. Note that the Free/Trial version only lets you remove a subset of the entire installation.