Goto Boot options and select the CD drive the where the setup cd u have inserted and run the setup.

To run the Recovery Console  from CD boot with the Windows XP CD (or with the optional 6 floppy disk set) and select "R" at the Welcome Screen.

The screen will switch to black and you will be asked which installation to log on to. If you only have one installation you will press "1". Remember that numlock is off at this time.

Next you'll be prompted to enter your Admin password. By default it is created blank so just press Enter.

At the C:\Windows command prompt type "Help" for a list of commands you can use.

How to Repair the Boot Sector:
If XP won't start it may be due to a damaged boot sector or a missing or corrupt ntldr or ntdetect.com files. 

To replace damaged ntldr and ntdetect.com you can copy fresh files from the XP CD using the COPY command. Boot with the XP CD and enter the Recovery Console (as above). At the Command Prompt type the following (where "X" is your CD-ROM drive letter) allowing the files  to overwrite the old  files
COPY X:\i386\NTLDR C:
        COPY X:\i386\NTDETECT.COM C:
To repair a damaged Boot Sector at the command prompt type FIXBOOT and press Enter. Then answer "Y" 

How To Format using the Recovery Console

format drive : /Q /FS:file-system

Use the above command (where /Q performs a quick format of the drive, drive is the drive letter of the partition to format /FS:file-system specifies the type of file system to use [FAT, FAT32, or NTFS]) to format the specified drive to the specified file system. For example the following quick formats C partition as NTFS
FORMAT C: /Q /FS:NTFS
the following will do a full format of C as FAT32
FORMAT C: /FS:FAT32
*** Note: If a file system is not specified, then the existing file system format is retained.

Type EXIT to quit the Recovery Console and restart your Computer

How Partition using the Recovery Console:

At the command prompt type DISKPART and press Enter.

An interface is displayed which you can move through with the Arrow Keys. Press "C" to create a partition in unused space. Pressing "D" will delete the highlighted partition.

How To Exit the Recovery Console:
You cannot use Ctrl+Alt+Del to quit the Recovery Console. Instead type "EXIT" at the command prompt and Windows will be started.

Boot to Windows.

How to Repair Install: ***Also removes Service Packs***
Sometimes the only way to repair XP is to reinstall. You do not have to wipe your partition and start over. Just as with previous versions of Windows you can reinstall right over top of an existing setup. This has the advantage of retaining your installed applications, data and settings. You will lose previously saved System Restore Points but System Restore will begin creating new restore points again immediately following the Repair Install. You will need to reinstall SP2 and any Critical Updates from the Windows Update Site. Be aware that a Repair Install will leave your system vulnerable to the Blaster and Welchia worms. Do not go on line until you have enabled XP's firewall first. Then visit the Windows Update Site to patch your system  It is always prudent to backup important data before you make changes to XP.

There are two approaches. The first one should be used if you can still boot to your Windows Desktop. Simply pop the XP CD into the CD-Rom drive and select Install->Upgrade[recommended]. This will install XP overtop of itself in the same way as upgrading from a previous setup. However if your version is an OEM version then you will not have this option. If you do not see the option to Upgrade[recommended] DO NOT choose New Install as that will either overwrite your current setup completely or give you a dual boot setup. Also if you have an older version of XP and have upgraded to a new service pack you will get a message stating that a newer version of Windows was found and you will not be able to run the Upgrade. Create a Slipstream version to solve this problem

If you cannot boot to the Desktop, or you have an OEM version of XP, or you want to remove a service pack then the following should be used to complete a Repair Install.

Boot with the Windows XP CD and at the Setup Screen press the Enter Key

You will be taken to the Windows XP Licensing Agreement. After reading the agreement press F8 to proceed.

The next screen gives you the option to do a fresh (clean) install or to repair the selected Windows XP installation. To run a Repair Install Press "R" at this time.
***CAUTION*** if you do not see the option to repair the selected Windows XP installation DO NOT choose the option to continue installing a fresh copy without repairing as that will overwrite your data and cause unrecoverable data loss.

Windows XP will copy the necessary files to your Hard Drive to begin the installation  and will then reboot. You will see the message that informs you to "Press any key to boot the CD". Do not press any keys this time just wait a few seconds and the Windows Startup Screen will be displayed. Following this you will be greeted by the Windows XP Setup Screens.

When Setup has completed you should find all of your previously installed apps and settings are intact.