"What would deleting cpu.inf do? "
It prevents XP setup from installing the cpu driver during installation which caused your 34% hang, 34% is the stage when windows setup is installing device drivers.
" Why is it there if I don't seem to need it?"
Evidently XP detected your cpu improperly and tried to load the wrong driver, or it could not properly identify your CPU and just hung at that point, know way to know for sure exactly what caused it to hang at that particular driver.
Sometimes doing a clean re-install will get it installed without error, it was a one time anomaly.