Download [highlight]
this file[/highlight] and extract it to a folder. Run the resulting bootdisk.exe with a diskette in the floppy drive. This will create a bootable diskette.
Use this diskette to boot the computer that you want to set up XP on. When the diskette has finished loading, type
delpart followed by enter and a small program will launch. Elect to delete all partitions.
Now reboot but this time from the XP CD.
Carry out the installation as normal, electing to format the C: drive to the file system of your choice (FAT or NTFS).
You do have a full WinXP CD and not a restore CD don't you?