I was going to post something regarding this. Thanks for raising the topic.
I played with XPE with another frontend. It can be trimmed down enough to fit on a CF card and with the Enhanced Write Filter and Hibernate Once Resume Many feature it is stable, quick to resume and fast overall.
The problem is you then have an essentially static boot image and still need a second drive for media/programs/paging/hiberfile etc. Upgrading SD, creating all the componentized drivers for the driver DB, adding programs etc. for a one-off would be a PITA.
Plus the cost. The developer toolkit/SDK is $995/seat and runtime licenses run $90/image.
BTW Maybe check out Nlite. It is a free tool that lets you strip a lot out of XP and still retain a usable OS. I got images down into the 250MB range using less than 64MB of RAM with little effort. Takes a lot of tweaking to get this kind of thing working but it will work with some patience and skill.



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