Removable USB drives use the Autorun feature to load files when the drives are plugged into the USB port. Malware uses the Autorun feature to spread from USB drive to PC.
Here is how U can Disable the autorun feature to prevent malware from spreading.

Windows XP PRO users

Goto Start >> Run

Type gpedit.msc and click OK. The Group Policy window will open.

In the left pane, double-click Administrative Templates
In the right pane, double-click System, scroll down the list and double-click Turn Off Autoplay
In the Turn Off Autoplay Properties window, select Enabled. From the dropdown next to Turn Off Autoplay on, select   All drives and then click OK. Exit Group Policy by selecting File, then choosing Exit from the menu.

XP Home users will need to make the changes by editing the registry directly.

To begin , Goto Start >> Run >>Type regedit and click OK. The Registry Editor window will open.

In the left pane, navigate to:
HKEY_CURRENT_USER>>Software>>Microsoft>>Windows>>CurrentVersion>>Policies>>Explorer.
With Explorer highlighted, in the right-pane right click the value NoDriveTypeAutoRun and select Modify from the drop down menu. The base value will be set to Hexadecimal. If not, select Hexadecimal.
Type 95 and click OK.
Note that this will stop Autorun on removable/USB drives, but still allow it on CD ROM drives. If you want to disable autorun on both, substitute b5 for the 95.

Exit Registry Editor by selecting File>> Exit from the menu.  Reboot your computer for the changes to take effect.