Did you boot to the XP CD or did you access the recovery partition on your hard drive?
Do you have any data on your computer that you want to keep?
If you reinstall XP you will lose all of your data.
If you choose to repair, your data should remain intact. However, if it's a virus that's causing you the blue screen, then the repair might not get rid of it.
So what do you want to do?
The XP CD has to be the same version as the OS you have installed on your computer. EG.. Professional, Home Edition, Media Center etc.
If your computer has Home Edition an XP Pro CD wont work. Get it?
Furthermore, if you choose to do the clean install, you will need your product key.
There should be a sticker on the side of your computer with the key. Do you have that?