Try booting directly from your XP CD. Your system is booting from the HDD now and going to where it left off.
Use this guide to help you: http://www.blackviper.com/os-install-guides/windows-xp-professional-install-guide/
When you get to step 4, you want to delete the previous partition and let Windows make a new one. This will wipe the previous install (and anything you have saved on the system) and let you put a fresh install in place.