I have already searched the forum for help, as well as google. But it just seems to advise me to do what i have already done or do it in linux.

Does anyone know whats wrong?

I am trying to get a bootable copy of BT3 working from a new USB key (8Gb), To save myself time I decided to try and set it up in xp (just run the .bat). I formatted it, extracted the iso to the USB...