I got it installed alright but I had go on the hunt for tools to make a bootable USB drive. First of all the restore disc that came with the computer wouldn't boot from a USB stick, so I dug out my old XP disc and used that. That started to install OK, but it decided the USB drive was C:\ and the actual hard drive partition was

\ and wouldn't let me change it. Then it would't accept the license key printed on the bottom of the computer. Then when it FINALLY installed it whined that "XP SP3 files have been replaced by unrecognised versions, system stability blah security blah blah, please insert XP SP3 setup CD" and wouldn't accept either the USB stick or the original untouched SP3 installation ISO.
All XP needs is an official tool to make a bootable USB drive. That's literally all it needs and anyone could have it installed and running in the space of 20 minutes. Microsoft should provide it, you shouldn't have to hunt for tutorials and tools and God knows what. Netbooks have been around for at least five years now. None of them have optical disc drives, yet all the recovery software is included on a DVD. It's ridiculous. Maybe it's easier with Windows 7, I don't know, but it's crazy that you have to jump through that many hoops to get XP installed on a netbook in 2011. Now compare that to the new version of OS X, which can either be installed straight from USB or - get this - will soon be able to
connect to the internet, download itself and start installing if you boot up in recovery mode.