It's not really that old. (I mean, it is, but …) Floppies were already becoming uncommon when XP was released, in mid-to-late 2001. For example, Apple had stopped shipping computers with floppy drives in 1998. They're usually on the forefront of that sort of thing, but, still, that's three years. Dell stopped shipping floppy drives by default by 2003.

In short, there was no excuse for the XP install system to fail to support USB floppy drives, or other USB mass storage devices.