Windows XP Bootcamp with USB?

I've been using my MacBook Unibody 13" since I got in in 2008 without trouble. I've set up Windows 7 with bootcamp about a year ago, and have been running fine ever since. However, I now need Windows XP to run quite a few tools. I've considered just running it inside a VM, but ultimately reckon it'd be better to just delete the Windows 7 partition, and install XP. But.

My MacBook's DVD drive has been giving me trouble over the past few months, and it's now to the point where it flat out refuses to read discs, so it's dead. Now I'm wondering if it's possible to set up Windows XP with bootcamp via USB, instead of CD?

I've still got my Windows 7 OS running, in case I need it to write the Windows XP .iso to USB, and don't want to remove the partition until I'm 100% certain I can use a USB for this process, as I'd truly be lost without an option to use Windows.

Possible?

Thanks for taking time to read this.

 

But the problem I find with running XP, or any other OS from a VM is the performance issues.

Just thinking, would using an external CD/DVD drive work?