ok, do you still have access to the internet while your PC is being formatted, just in case you need to ask questions? If so, go ahead:
1. As pdworkin said, you’ll need to change your BIOS sequence so that it tries to read the CD, and not the HDD first. There are different ways to do this depending on what motherboard you have, but on mine you have to press the DEL button as soon as you turn on the PC (when the first black screen with the letters appears). On my laptop it’s F2. It usually says what you have to press, but it goes very fast so you have to look out to see it.
2. You will enter a screen with various options. Your mouse won’t work here, and you need to do everything using the keyboard (arrows etc). Find the boot sequence, and change it so that it says CD first, and then Hard Disk. Remember to “Save and Exit”.
3. If you have the Windows XP CD in your CD-Rom drive, everything should start automatically now. The screen will ask you to “press any button to start from CD” and then have fairly clear and easy-to-follow instructions after that.
4. At some point it will ask you if you want to format the “partition” (this basically means your hard disk, which could be divided into one or more partitions). Say “yes”, and choose whether you want quick format (it deletes everything on your disk) or slow format (it deletes everything and you could never get it back if you change your mind). It’s basically the same if you want to start over as you said. “Quick” is much quicker.
Windows will basically do the rest, XP is fairly easy to install and use.