Here is the recommended procedure according to Microsoft, but first, make sure you made your CD-Rom drive bootable in BIOS.
1) When you get the prompt to boot from CD, press enter.
2) When the drivers and boot files are copied press enter to install XP.
3) Press C to create a new partition and enter to partition the full HDD. Make sure you choose the correct drive if you have more than one.
4) Choose full format NOT QUICK.
5) Press F8 to accept the EULA. This may appear earlier.
5) After the drive is partitioned and formatted the i386 files are loaded and the computer will reboot.
6) Keep the CD in the drive and allow the computer to boot to the HDD.
7) A basic color interface screen shows up and when prompted, provide the requested infomation.
Again, make sure your BIOS has the CD-Rom drive bootable in this order...