1- In the same way that you format an partition an old HDD, first you create the partitions and after you format this.
2- Yes you can use xp or vista CD, but with the problem that you have don't let you. The installation shows you an specific error? or just don't create the partition.
3- If you don't have the problem, you can use the xp, vista or 7 installation CD/DVD, BUT in this case you need another tool for format and partition the new HDD. Download hiren's boot CD, and this contains the tools for do the job without problems.