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Disk Read Error when trying to install XP

Last response: in Windows XP
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I just reformatted my hard drive using Windows XP reinstallation CD. After successfully formatting and installing xp, it goes to restart to continue with the setup. Once it starts to boot it says that "press any key to boot from cd" but I don't do anything cause it's not supposed to so it trys to boot from hard drive but says: "Disk read error Press ctrl + alt + del to restart." I dont understand whats up. I had Windows 7 installed before but do to unfortunate circumstances I have to install XP for now, but I can't complete the installation.

Priority Boot Sequence:
1. CD
2. Hard Drive

Thanks

More about : disk read error install

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Change the boot sequence (1- HHD, 2- CD), press F8 to boot from the CD and start the installation again. Press the key for start the Win XP installation, and when the PC re-boot DON'T PRESS ANY KEY.
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I just tried the other Windows XP Reinstallation CD in the house and there are some corrupted files on it (the disk was scratched up a bit). I feel as if I have tried everything.

I have done:
fixboot
fixmbr
chkdsk /r

all of these to no avail (they said they fixed some problems though).

Right now I am about to burn a BIOS update to a bootable CD, but if that doesn't work then I need to know if my hard drive is kaput. I can easily run out and buy one of equivalence for $50. But before I do that I am going to try reinstalling Windows 7 if I can get the DVDs from my buddy's house (he is outta town so that might be hard). If this looks like a hard drive gone bad please tell me. I feel like I've wasted so much time.
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