You can format a laptop hdd just as you would a PC hdd. If you're reinstalling Windows, boot off the CD. If you want to clean the hdd and give the machine away or replace it, should be able to use what ever program you're referring to. If you're giving the away or just replacing the hdd, data will still be recoverable if anyone wants to try to recover. You can get software that will overwrite the drive that makes this more difficult but by no means impossible.
You can install Windows XP by booting off the Windows CD. You should be able to go into the BIOS, usually just hit the Delete key at start up, and change the boot sequence so the machine looks for the DVD/CD driver before the hdd. Once the installation is complete be sure to remove the CD, you should get a message to do so and go back into the BIOS and reset the boot sequence so the Floppy is first if you have one and then the hdd. If no Floppy, just set the hdd as the first boot device. Laptops work pretty much the same way as PCs. You'll need the drivers that came with the laptop, should be on a CD. To save time you can download the latest drivers from the mfg website, put them on a CD and install them, saves the time of up dating them