Thanks Willy. I've tried several versions of the USB installs and they all seem to hang when files need to be put on the HDD. Like R.Proffitt stated, it's probably an issue with XP not being able to work with SATA without drivers. I even tried a Live DOS USB with FDISK. FDISK insisted the HDD to be Drive 1 and the USB to be Drive 0. So it couldn't make the HDD the active bootable one.
The adapter looks interesting, but since I only expect to use it once or so, I'm going see if Santa may spply me with an external DVD drive. I'll check back after Xmas.