I agree with mailpup.
Here is what I would do (perhaps you've already done this and it didn't work):
1. Set BIOS boot order to this: 1st CDROM, 2nd Hard Drive (nothing else matters after this point)
2. Boot with XP disk in the CD Drive. XP, I believe says "press any key to boot from CD..." press a key so you ensure it boots off the XP CD.
3. Format and install during the setup.
4. When the computer reboots during setup, remove the XP CD*. The computer then tries to boot from CD, there isn't one, so it goes to 2nd priority boot device, the hard drive. XP's initial setup puts the crap on the hard drive so it will boot from the hard drive and continue the installation. I think it will still want the CD at some point during installation, so put the CD back in after the XP setup starts to load from the hard drive.
5. Complete the installation.
* You shouldn't have to do this step if you avoid pressing any key when the XP disk says "Press any key to boot from CD..." but not having the CD in the drive in the first place eliminates the potential for something to go wrong here and it boot from the CD anyway.