PC startup/windows install problems

Help please! I've got major problems here. After trying to start my computer, it all of a suden gives me that infamous ...INSERT SYSTEM DISK msg. (Btw, could this result from having a USB flashdisk plugged in and turning off the computer with it still in the USB port?)So its time to reinstall windows XP. But now this is what kills me. After I go through formatting the drive and loading the files, after it asks you to restart, its supposed to continue the installation only this time with the windows logos and stuff. But instead of doing that it goes right back to the beginning of the installation. I'm stuck in a loop!!!!!!!! I have no idea how to fix this and I'm getting desperate here. Could it be because of a bad Windows CD? Any suggestions you guys give me would be much appreciated.

99% of the time that you can not install the OS, the problem is bad RAM. Run a program like memtest86. Also, make sure that all OC is turned off.

I really doubt that there is any issue from having the USB device plugged in.

Ok thanks for the advice. I will check the ram.