I am back at work now...so will have to try again later.
Full details:
This hard drive was set as secondary master before the format and it was partitioned into 2 drives (neither of which had an OS on it). I pulled the Primary Master HD out to use in another machine and switched the cable to the primary slot in the mother board.
This XP CD was fresh out of the original packaging, no scratches, etc. I used Windows Installer to delete the old partitions and reformat as NTFS. The First segment of the install works flawlessly and everytime it attempts to reboot it gives the error.
The BIOS shows the drive as primary master and has the CD drive listed as primary slave. No secondary cable is installed. No jumpers were changed, but I will double check to make sure they are in the correct positions, I almost always have it on cable select.
There is 1 USB device installed, a printer, so I will remove that as well. I have reinstalled 3 times and tried repartitioning the drive once too.
I feel like such a n00b, have done this many times in many different computers and never came across a drive that BIOS can see, but that it will not boot the OS.