I see... sorry for taking too long to answer was afk... seems your hard drive has some sector problem, try starting again the computer with your windows CD but in the first menu choose repair instead of install, this will get you into the recovery console from which you should be able to run the chkdsk command (chkdsk c: /F).
This should fix any HDD issue so you can finally install the OS.
EDIT: just noticed the specs of your laptop, XP has issues with AHCI mode on the HDD, try setting it to IDE in BIOS, other ppl report having the same issue as you solved by doing that change.