boot - Installing Windows XP (SP3) from USB stick on a Netbook with only FreeDOS

Recently I bought an Asus X201E-KX179D netbook and it has no Windows installed on it, only the BIOS. No DVD Drive, no OS installed.

When I start my netbook, I get three options:

1. Load FreeDOS with maximum RAM free using EMM386
   


2. Load FreeDOS including HIMEM XMS-memory driver
   


3. Load FreeDOS without drivers

And I get the option to press:

F5=Bypass startup files
F8=Confirm each line of CONFIG.SYS/AUTOEXEC.BAT

I copied the Windows XP (SP3) .iso image file to my pendrive (Scandisk-8GB) using Rufus and made my USB ready for boot as well.

However, when I insert my USB and enter BIOS setup for changing boot priority, USB Boot is not shown in the boot options, or it is not recognising the USB. When I restart my netbook with the USB inserted, again it goes back to Freedos mode.

Kindly help me to install windows xp (SP3) or Windows 7 (Which is the best option?).

Additional info: USB Ports (Unlocked) in BIOS Setup