I've been building custom XP boot platforms for sometime now. I read a similar article to this back in 2006 that says some USB latency times can be as much as 30-sec this will cause the CPU to lower the priority on the device causing it to appear to be hung. Other Issues you might want to look into are too many services trying to startup during the boot process. The CHIP magazine (June-2006) edition says to first turn off services that you won't need on your bo0table USB recovery disk. This includes IIS services in XP-pro. If there are apps and drivers your systems need during boot up such as special device drivers (F6) then you can preload the image with them automaticly using Nlite (
http://www.nliteos.com) you will have to have frameworks2 working first before you install it. So If your trying to save a dying system I'd advise another work around. MS also offer an XP imaging recovery tool (API-V2) that also includes your original USB driver in the build. I've not tried the tool yet because I don't have a paid MSDN account, but you can get kb-932716 here
http://goo.gl/zgAcQ