Some things to know before you get started:
1. The first thing you'll need to do is prepare an SD card with the Windows install and the contents of your HP driver disc. I did that using a lot of help and tools I found here: http://www.liliputing.com/2008/04/install-windows-xp-on-mini-note-usb.html - I used a 4GB flash card so I'd have room to copy the HP disc onto the same card, which ended up working well. You don't need a special process with the HP disc, just copy the files into a folder on the card.
2. You need the CD-Key that is on the sticker on the bottom of your laptop (check to see you haven't worn it off somehow, nice placement HP) and you'll need to activate windows once it is installed (it went smoothly for me, and I did it twice).
Here is the procedure as I explained it to my friend:
1. You might want to make sure the little tab on the SD card is set to 'Lock' - slide it down away from the business end of the card. I set it that way and I think it is safest, that should make it read-only.
2. Insert SD card. It is probably best to remove all the other flash drives, peripherals, etc. from the machine to simplify things.
3. Boot, hit F9 to choose boot device, choose the flash card (should say USB I think)
4. You'll get a standard XP boot prompt - choose the text only install (should be labeled '1.') to start (you'll switch to GUI after reboot)
5. Follow windows setup prompts:
7. On reboot, hit F9 to choose the boot device again!
8. You'll get a standard XP boot prompt - choose the GUI install option this time.
9. This should be the standard XP setup you're used to. Sadly the USB isn't really any faster than a CD, but you don't need to babysit it.
"Windows could not start because the following file is missing or corrupt:
\system32\hal.dll. Please re-install a copy of the above file."
Hit enter and the system should try to reboot. Hit F9 and boot from the SD card again. Choose the GUI install option again. This should actually boot you into windows. I have no idea why this works, haha.
11. You should be presented a login screen with two users: Owner and UserXP. I've been using Owner and it seems to work. Click Owner to login.
12. Windows will gripe a bit about the display being low-res. Don't worry about it; the HP driver install will fix all of that.
13. Start->My Computer->C:\->show contents. You should have a boot.ini file in C:\ - you might need to go to Tools->Folder options and change some of the settings to see it, but probably not. double-click boot.ini to edit the file. You shouldn't need to change much. I made mine look like this:
multi(0)disk(0)rdisk(0)partition(1)\WINDOWS="Microsoft Windows XP Home Edition" /noexecute=optin /fastdetect
14. Remove the UserXP user account from the control panel. Start, Control Panel, User accounts, click on UserXP, click 'Delete this account', don't bother saving files or anything.
15. Go to the SD card (mine was D:\ - the label is USB_XP_710), open the HP folder, open SWSETUP, open APPINSTL, double-click SETUP.EXE
I hope this helps you. Use these instructions at your own risk.