XP install problems, formatting issues, power cut outs,

My PC started to run really slow and occasionally the power would cut out unexpectedly.
It was getting old so i decided to wipe the hard drive and reinstall windows xp pro(I intend ultimately to have xp on one drive and linux on another partition).
When it came to installing i put the XP install disk into the CD player and chose format options to format the drives.
First problem: "unable to verify drive - CD or disk may be damaged"
I new the CDs ok, so i bought a new hard drive. Still no good.
After a lot of research i understand that my MOBO (K7N2) may have an issue when it comes to partitions greater than 9765 MB and NTFS file structures so i chose quick format which seemed to work right up until "saving your settings" when it hangs.
Now: computer won't start at all unless i remove and reinsert the power cable first, then at best i get the screen listing drives and bus addresses and the message unable to load operating system.
After about a minutes of this the power cuts again.
Any thoughts as to what's going on?
Is my MOBO blown?
Should i get me a new PSU?
Thanks for your help.

My Set up:
PSU: Macron MPT-300
MSI K7N2 MOBO FSB 400
AMD Athlon 64
RAM: 512 + two 256 MB 266 MHz 184 pin DDR DIMM
Hard Drives: original: Maxtor Diamond plus 9, ATA, 60 GB
now also: Seagate Barracuda 7200.10
DVD ROM, CD RW, Floppy
Generic Steel tower.