I'm with Chas on the PS Issue a 130 W is way too small for any half way decent system.
The other thing that may be causing problems is the 3 GIG HDD as this is very small and will only support a minimal install of XP.
Now for the compatibility check that isn't always accurate and even if you have the Compatibility Tool that MS has withdrawn it was only good for the Original XP and hardware that worked perfectly on XP caused the HDD to be erased when SP1 was installed. I spent a week with a computer and a not so old one when SP1 was released and all because the Samsung DVD reader wasn't compatible with SP1.
The common problems in the compatibility side of things are Optical Drives particularly Burners but you are not restricted to just these. I have a friend with a K62 350 Running XP quite happily although slowly so that CPU will run XP but I did update the RAM to 256 MEG for him before installing XP and removed the old Optical Drives and replaced them with new units and a bigger HDD would be nice something like a 20 GIG unit as XP is much bigger than 98 ever could hope to be.
Also if you can replace the PS with a standard unit fit at least a 350 W PS as it will help the system no end of course as you didn't mention the make of this unit that may not be possible as you may have a propriety unit that you can not change the PS in, if that is the case I would start looking at a new case that will accept your existing M'Board with a bigger PS but honestly with XP nearing the end of its life cycle you would be better off with newer hardware you will really appreciate it when it comes time to actually sit down and use the computer.
Col
