first, i suggest you contact HP support to verify the correct steps on how you will create a recovery cd. they might be able to help you tweak some settings to create a fresh and updated set of recovery disks. recovery or factory default cd's are very important for future troubleshooting needs.
your bios settings for the hard drive/sata may need to be set to "Compatibility" mode. this way the windows xp installer will be able to detect the hard drive.
your default settings is probably set to AHCI
. this works best for Windows Vista - Windows 7 installations, but Windows XP does not detect the hard disk this way.
set it to Compatibility
, and try to install again