I think the disc you are using is a "Recovery Disc" and not a "Installation Disc".
Correct. If I start the system it says "Insert disk labeled 'Windows XP Professional Service Pack 3 CD' "
The disck, which is the only one I rec'd, with the Dell, says "Reinstallation CD" and elsewhere it says "use this media only to reinstall the OS on a Dell..."
So if I understand you I need a disk other than the one that came with the Dell?