This procedure will not work when IE7 is integrated into the CD, because this causes files with long names, *.dll.mui to exist in the i386 folder, and winnt.exe will complain of missing *.dll.mui files. You can still integrate SP3 and WMP11 without any problems.
1) Create an USB CDROM supported bootable floppy (rawrite2 -> dosboot.img): http://www.addonics.com/support/faqs/windows_OS_installation.asp
2) Download and run boot98sc.exe to create a floppy with smartdrv.exe and himem.sys on it. http://1gighost.com/ed/ta/boot98sc.exe
3) Copy the contents of the boot98sc.exe floppy to a folder on the desktop.
4) Follow the instructions on this page to add smartdrv.exe and himem.sys to the floppy, this will help speed up the whole process. You can grab smartdrv.exe and himem.sys from the folder on your desktop. http://windowsitpro.com/article/articleid/13897/how-do-i-use-smartdrv.html
5) Copy fdisk.exe and format.com to the floppy if you want to quickly wipe your hard drive. Then create a primary DOS partition, and make sure you "format C:" afterwards.
7) At the prompt, run "xcopy32 R:\i386 C:\i386 /e", press D for directory
9) Disconnect the USB CDROM drive. CD I386 folder (C:\I386) then type winnt.