Run the preboot diagnostics with the extended tests as instructed above. See Windows Reinstallation Guide, there is a section on diagnostics create the bootable diagnostics CD:
http://en.community.dell.com/support-forums/software-os/f/3524/t/19480753.aspx
If the diagnostics pass you should slipstream service pack 3 and begin the reinstall.
Note windows XP is reaching End of Life in April 2014 and it is unadvisable to reinstall Windows XP. See Windows XP SP3 and Office 2003 - End of Life April 2014. This system runs Windows 7 32 bit and Windows 8.1 32 bit. I am writing this post on one with Windows 8.1 32 bit installed.