Since I raised the subject I've had a mail from a couple of people on the subject of making a bootable key.
I described the steps making a USB key bootable using the Vista / Windows PE version of Diskpart. Here are the commands
Now at this point you have a disk which will try to boot using BootMgr in the style of Windows PE/Vista/Longhorn server. Several people have asked about making a key which boots in the style of Server 2003/XP/Windows 2000/Windows NT. I can't make the Vista/PE version of disk part run on Windows XP, and the older version won't prepare a USB key. So you need to do this from Vista or the Vista build of Windows PE. Once the drive is formatted it has a Vista Boot sector - this won't boot NT / 200x / XP operating systems. You need to use the BootSect utility:Boosect /nt52 E: stamps a Window 2003 Server boot sector (one which uses boot.ini) onto drive E:. I haven't tried it but you should be able copy NTLDR, BOOT.INI and NTDETECT.COM onto a USB key as a way of starting a machine which with a corrupt boot environment.
For now, as far as I can tell, there's no way to set-up such a device under XP/Server 2003. I'd welcome any correction on this.
There is not such a way - publicly - to set up a UFD (USB Flash Drive) for booting before Vista. There was an OEM only tool that can put a boot sector down.
For users wanting to follow your steps above - they should note that they shouldn't put Windows on a UFD - but if you want to use an earlier version of WinPE, they can use the steps you mentioned, and put setupldr.bin down as ntldr (just rename it). In that case they also don't need a boot.ini.
I like 64 bit vista. It's proved be excellent at performance, reliability and application compatibility
I am installing Windows Server 2008 on a new server that has no video card and no DVD drive. It's an
Hopefully the title is self evident. The servers are taking a real pasting right now, so you might find