Well, first of all, we can't instruct you on installing XP in this manner because it is considered illegal and we don't help with such things.
Also, the CD you have won't put XP on your laptop, as it is only a Service Pack. You have to already have XP installed in order to use SP3. Unless this is an XP CD bundled with SP3, but I'm not aware of these existing yet. I could be wrong, though.
I would suggest getting a CD-ROM drive for your laptop (you should be able to find one for $20). Or if you think that will be too complicated, you can get an external CD-ROM drive that you can connect to your laptop via USB. I don't know why you don't have CD-ROM, but it's a very important component. And, of course, you are going to need an actual Windows XP CD and not just the SP3 update.