Interresting indeed.
Well did you get your new RAM? I hope you got a matched pair, suited to your motherboard and of higher quality.
Did you fix the floppy? If the light stays on all the time it means your ribbon cable is backwards.
Download Seatools I think it is, from Seagate's web site. They will have diagnostics and burn-in tests and so forth to test your drive fully.
Since you've loaded and reloaded drivers a thousand times, would you be willing to reload it once more?
Once you get good RAM, and get your HDD tested (and replaced if bad), you may want to reload again. I've had cases where Windows was installed with malfunctioning RAM installed, and Windows would NOT work right (with new RAM) until a reload. Somehow the data corruption during XP load just stuck with it.
Get your floppy working, and USE it to load the SATA driver during XP install (by pressing F6 at the start of XP install). NOTE: be sure to load the SATA driver, and NOT a RAID driver, if you are just using one HDD.
When Windows is reloading, assuming NO problems during install. Install your drivers in this order: (do not do windows updates or anything else, I like this order)
1) Core motherboard drivers first. Meaning your nForce2 set, either from DFI OR Nvidia, shouldn't matter, get latest one and install all parts of it.
2) Other motherboard drivers not part of nForce. Which is usually the SATA/RAID driver, perhaps a gigabit NIC if it has one.
3) Video drivers. At this point it should be just fine for you to go to Nvidia and get the latest driver. Don't even install drivers off the CDs, just go to the web sites. Unless you need the NIC driver off CD.
4) Check Device Manager that everything is loaded properly, no exclamation points or red "X" etc... If you have an "unknown" or unloaded RAID driver, you can just leave it, since you aren't on RAID. As long as the SATA driver is loaded.
5) If drivers check out, do your Windows updates. Then finish whatever else from here on.
Note it is perfectly safe to load your initial nForce chipset drivers off the mobo CD, but you may want to get the latest version later.
This is fairly standard loading procedure and should not give you issues. If it does give you issues, we may still be looking at hardware problems.
I have a sneaking feeling that loading XP, with faulty RAM, on to possibly faulty hard drive, without using proper SATA driver support; mixed with loading and reloading drivers a hundred times, amist enumerous crashes and BSODs; has created a monster.
I would like to see you replace your RAM and HDD if needed, and reload once more.
Good Luck (and double-check your CPU and RAM is compatible with that mobo)