Yea lol. Ok well is there any files of value on there or no? Also let me look this up. The reason why it is doing this though is because even though it started installing find while you were running windows, when you install off a USB drive it usually need special drivers to read the USB drive. So even though its plugged in windows doesn't have the drivers to access it. And at this point right now if the CD rom doesn't work and if you can't get it to boot from USB then your going to have to get a new CD Rom drive for it. IF we can get it to Boot from the USB I can point you to a tutorial on how to properly boot and install XP From a USB drive which you will have to setup on another PC though, otherwise only option is a new CD rom drive.
Unlesssss you can try using a USB CD Rom drive if you have one? That may work. A lot of there older laptops only support Network, Floppy, Hard Drive, and CD.DVD drive booting unfortunatly.