why don't you delete the partition during installation.. if you have 2 xp in you machines, then you have to careful in deleting the old one, bcz it may delete your boot records . go to the newly installed xp & edit boot.ini file to select the newxp while booting & delete the entry for old xp..
if your machine goes fine after restarting in new xp then you are safe to delete old xp from disk management by formatting C: drive