Acer netbook not seeing hard drive

I have an Acer Aspire one with a problem booting up windows XP. I hooked up an external USB CD rom and boot from the windows install disk so I can run the repair. I keep getting a notification saying "Set up did not find a hard disk drive installed on your computer". How do I get past this?
 
If you are comfortable checking a setting in the BIOS, are you able to go in and check to see if the SATA Controller is set to RAID/AHCI/IDE, and report back with what you find?

If it is selected as RAID this is probably the reason, as the installation requires the RAID drivers via floppy before it can recognize the drive.
 
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