You should use the instructions here:
http://osf1.gmu.edu/~sfiorito/eXPinstall.htm
Make sure you have a good CF-IDE adapter like from
http://logicsupply.com or
http://www.acscontrol.com. I've never used the Extreme IV, but if it supports UDMA then the computer will be able to use it. You may indeed get faster throughput from USB and you can boot XP from it with some registry and file hacks.