Could you compile more detail message about your problem?
From what I see in your input it sounded like you don't get whether FBA
should restart your XPe device? It should and the reboot may happen a few
times depending on the components included into your image.
If FBA repeatedly reboots you device, then you might have not setup properly
your boot drive (partition) in TD project settings ("Target Device
Settings"). Here is more info on that:
http://www.microsoft.com/windows/embedded/community/tips/xp/reboots.asp
You might also check you FBA log - \windows\fba\fbalog.txt.
Hope this helps,
KM