|What is the make and model of your netbook ? |
If you have an old model, your bios may not have the ability to boot from a USB drive of any type. OR, even if you do manage to boot from the USB DVD drive, if the USB drive model you're using is not one that came with the netbook, or was not one that was an option for the netbook you bought later, XP's CD can't recognize most models of USB optical drives, unless the brand name XP re-installtion CD has the proper info added to it so that it can do that. In that case, you need to use a different method to install XP, then you can install the software from other Recovery disks if you have any.
For more info, see response 5 in this, starting at
"If you still can't get that to work, there is a method you can use when you can't boot from the CD drive,....."
For most computers that have XP on them, the first (or only) Recovery disk is an XP re-installation CD - it can be used the same way as a regular XP CD.