MSDN has published an article about using Windows PE in Windows XP Embedded Development

The Microsoft Windows Preinstallation Environment (Windows PE) CD-ROM provides a small but powerful boot environment that you can use for many Windows XP Embedded development tasks. You can bring up a device that has no operating system or hard drive, run Target Analyzer to create a device list, format and partition a hard drive with DiskPart, and connect to a network. After an image is installed on the device, you can also use Windows PE to fine-tune the files and registry.

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