If by some reason you make a non-bootable ISO you can use CDIMAGEGUI to take the files and create a bootable disk out of just the files on the CD. I have been using it for years without incident.
Best bet (unless you feel like telling the program where to look for stuff is do everything in C:\
Extract CD (windows drag and drop is fine) to C:\XPCD
CDIMAGEGUI if I recall correctly extracts itself to C:\CDIMAGE if not put it there.
It works great been using it since XP SP1 for slipstreaming service packs.
NLite I have had nothing but trouble with (I built my unattended disks by hand) they always seem to go wonky after a few weeks. However for a benching OS, there is nothing easier.
I have been meaning to make one with application installs but just have not had the time to do so.
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Special relativity is not "Eat Two Big Macs."
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