After reading about tinxy, I tried with their latest Tiny XP vista Edition.

Installed in minutes , its running under 100Megs and took less than 2gb space on HDD. Probably its time to look under the hood and start using NLite Utility -

nLite is a tool for permanent Windows components removal and pre-installation Windows setup. After removal there is an option to make bootable image ready for burning on cd or testing in virtual machines. With nLite you will be able to have Windows installation which on install doesn't include, or even contain on cd, unwanted components.