Download Windows XP SP2.
Use a software called Nlite to slipstream the SP2 into your Windows XP SP1, this will allow you to create a new Windows XP with Sp2 already in it.
Burn the CD.
Go into BIOS.
Configure SATA as IDE
Try to install it again.
All the best,
Tips how to integrate drivers using Nlite, use same principle to build your new OS.
Check this website for Nlite instructions: