OS/Hard disk failure (Laptop)

I own a Toshiba laptop (Satellite series), it has a bad dvd drive. It runs on XP home edition, i had it boot up and it showed me a “SMART disk failure” after that it refused to boot. I manually pulled out the laptop harddisk and backup my data using a USB converter for external harddisks. My main problem is i have tried to use an external USB dvd writer to try and reinstall the backup system CD. How else can i reinstall my OS… and get my laptop running again. What i have available to use in trouble shooting: External DVD writer, USB harddisk converter, System reinstallation/backup DVD, New 80GB Laptop Harddisk, spare laptop