BSOD "STOP 0x0000007B" after installing WIndows XP on external HDD
Solution 1:
Windows XP does not support booting from a USB drive without some tweaks. There also seems to be an issue with some hardware no matter what. While the system recognizes the USB drive as it starts to boot, it drops the USB connection and the boot process fails. There are several sites that detail what is needed. Here is one to get you started USB boot (mirrored here)