booting from xp-cd with an existing os will do an upgrade, inheriting most or all of the problems from the old os. your best plan is what you just first thought of, i.e. clean it out and do a clean install of xp.
do this:
get a win-98 boot disk from
here
this will create a new bootable floppy disk for you
turn off your machine
with the
new boot disk in the machine
turn it on
choose "boot with cd rom enabled" option
you will see a
c: prompt with a blinking cursor
do an fdisk on the command prompt
type fdisk and enter
delete existing partion
create a partition
choose (use maximum drive capacity)
turn machine off
when it boots up again (same process)
at command prompt type
format c: and enter
after format finishes
turn your machine off
put win-xp cd in your cd rom drive
turn machine on while tapping del, f1, esc, or any key that will get you to
BIOS
in bios, select boot sequence and choose
"boot from cd-rom first"
let machine start from xp-cd and follow instructions for install.