Firstly it could be a hard disk problem.
Secondly you can get that computer working, even without a hard disk drive. Use Linux, I recomend Ubuntu Linux, which you can boot of the CD (Once you have successfuly burned a copy to a CD) and do whatever but however you will need a USB or an external storage medium until you get a hard disk. Once the hard disk is installed you can the install Linux, which is a Freeware operating system (Completly Free, normally no Eula's) and also doesn't need antilvirus.
BTW you can get a distrobution called Ylmf OS which looks EXACTLY like windows XP or you can get Lubuntu which you can modify to look like XP.