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When installing windows it gives you the option to delete a partition and format a drive with XP. Dont worry about doing that with a floppy as it only formats as fat32, not nfts. NTFS would be prefered for windows xp for sure.
To answer your question of the above, it would need to be a windows 98 floppy or dos, like dos 6.22 to format, if you made a bootable disk with windows xp home edition, it doesn't do the same thing, especially not when formatting to ntfs as ntfs would be too big to fit on a floppy. It takes 5mb for its self.
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