One way to Partition a USB Flash Drive from Windows XP and mark it active "bootable". Windows detects many Flash Drives as "Removable Disks" and flash drives are often shipped formatted as a "Super Floppy" (USB-FDD without a partition table) . The Windows built in format utility cannot create a partition table on Removable Disks. Furthermore, the diskpart utility in Windows XP will not allow you to partition Removable Media, although diskpart does work for partitioning a Flash Drive from Windows Vista/7.
To address the inability to Partition a Flash Drive in Windows XP, you need to use a third party low level partitioning tool such as BOOTICE, created by Pauly. BOOTICE Home Page
Note: I partition my flash drives as USB-HDD (with a partition table), simply because my computers support booting from Flash Drives formatted to be seen as a USB Hard Disk.