You cant just transfer a hard drive over unless the motherboards on the two systems are identical. If you have an XP disc you may be able to repair the installation and get it to work on the new machine but you really should do a full reformat.
You can pick up vista with a free upgrade to 7 off of newegg for $110 right now, windows 7 home is currently pre-ordering for $200
It sounds as if your hard drive may be dead, you should get further than that even if the chipsets are wrong.
Try using a live Linux distro (Such as Puppy) and checking if there is anything on the hard drive.