Most likely the problem is that the machine has a SATA hdd and XP does not have drivers for SATA. You will need to create a floppy with the SATA driver on it. For some reason, the HP website doesn't seem to have the SATA driver for your machine. However, your machine has the ECS RC41-M motherboard (according to the HP site) so you can DL the driver from the ECS website, DL the RAID SATA Controller diskette: ECS Web Site
Hopefully, you can boot from the XP install CD and get to the point where the installer prompts you to press F6 to install other drivers. Put the floppy in the drive at that point and install the SATA driver. XP should install fine after that. You'll still need to DL and install other drivers from the HP website.
Another possibility is to enter the BIOS setup and see if the SATA controller can be put into IDE compatibility mode. This will allow the hdd to work with XP. Performance will not be as good so if you go this route you will want to search on google for how to switch back to AHCI mode for the SATA controller after the install.
Yet another possibility would be to use a program like nLite to "slipstream" the SATA driver onto the XP install CD.
Once you get XP installed, use something like Macrium Reflect to create an image of your hdd so you can resore it more readily in the future.