installation

if i want to install windows XP Os
in doing that iam getting doubt that is
after installing OS cd to hard disk , the set up and copy all will be installed to Hard disk,
so afterthat we will remove our Cd and then we will install it to the CPU or RAm??
which is correct
or after installing the Os we will remove the CD and then and then we will boot mean at that time it will be installed hard disk,
afterthat we will install hard disk to cpu or RAm?
, can u explain the inner functions simply
please