It was not used at all before Constantine introduced it.^*

In fact, in the most literal reading of Lactantius he might not be describing the Chi Rho at all:

Constantine was advised in a dream to mark the heavenly sign of God on the shields of his soldiers and then engage in battle. He did as he was commanded and by means of a slanted letter X with the top of its head bent round, he marked Christ on their shields." — Lactantius, De Mortibus Persecutorum, translation J. L. Creed

That's not really a Chi Rho. A slanted X might well mean a cross. A cross with the top of its head bent round is a Christian symbol that was used at the time, called a Staurogram.

Of course, perhaps it's just a clumsy description, or perhaps Lactantius was mistaken. We do know that Constantine made heavy use of the Chi Rho later, including on the Labarum, as well as on coins and on his helmet.

So, why introduce the Chi Rho? One possible explanation is that the Chi Rho closely resembled a Danubian pagan symbol representing the sun. This symbol is almost the same the Chi Rho, except instead of a straight line with a loop to the right, the letter rho, it's more of a straight line with a circle on top, representing the sun rising over the mountains. Can't find a good depiction online, sorry. But it looks very similar.

Throughout his reign, Constantine was quite careful and clever in using symbols that could be interpreted as either Christian or Pagan, depending on the eye of the beholder. The Chi Rho might be one such instance: To the pagan majority it would have looked like an unexceptional religious symbol from Constantine's homeland, but to the Christians it would have represented Christ.

Whatever the truth, it seems that during Constantine's reign the Chi Rho was seen more as a symbol representing Constantine and his dynasty than as a religious one. This changed in later years, when it became more associated with the church.

^* All information taken from: Drake, H. A., Constantine and the Bishops: The Politics of Intolerance, pp 201-203