I have a USB floppy but the XP install will not see the drive. You will need to make a custom install cd using the slipstream instructions. The combination of these two sites should get you going. I would strongly recommand slipstreaming XP2 as this will greatly speed up your install/configure times.

http://www.winsupersite.com/showcase/windowsxp_sp2_slipstream.asp
http://www.maximumpc.com/2005/01/how_to_slipstre.html