Your truth table is correct as far as I can say, and you should be able to derive the state transition diagram from it.
It should go like this: We have four states s0:{}, s1:{q}, s2:{p}, s3:{p,q} and the transitions are obtained as follows: For example, in state s0:{}, we have !p&!q, so that the transition relation reduces to !(b|a&xp) which is equivalent to !p'&!b | !a&!b. You know that already. Hence, we have a transition to all other four states and we obtain their labels by further instantiating this formula with the target state:
- For the transition s0->s0, we have !p'&!q', so that the transition relation becomes !b | !a&!b which is equivalent to !b.
- For the transition s0->s1, we have !p'&q', so that the transition relation becomes !b | !a&!b which is equivalent to !b.
- For the transition s0->s2, we have p'&!q', so that the transition relation becomes !a&!b.
- For the transition s0->s3, we have p'&q', so that the transition relation becomes !a&!b.
In the same way, you get the other transitions and their labels.
