This includes E-Mail, Address Book you can wipe the HDD with the following Utility.
http://tinyurl.com/4rfur
There is a CD version listed here that you can boot from and write Zero's to every Sector of the HDD.
As for the reason that the Recovery Media is no longer being accepted this could be because the HDD is different or altered from a Factory Fresh Install as there is nothing else that should cause this to happen.
You'll need to use your Recovery Disc to load or install all the drivers for this Computer when you install Windows. If you use a different Install Media you will not have drivers for things like Video, Sound, USB maybe, LAN again maybe and several of the other things built into the system like WiFi and other things like that though the system will work and you can access the drivers from the makers Web Site.
If you have a Hidden Partition on the HDD you should be able to install everything from there but if you don't have this you can use the Recovery Disc and reload the system after you wipe the HDD.
If you want to create a hidden partition all you need do is format a FAT 16 Partition of a few Hundred MEG and copy your Install Media to that with a DOS Boot Disc. Though if you have never done this previously it's probably not worth the time & effort to try.
Once the HDD is wiped the Recovery Media should work you should be able to reinstall quite easily though to be fair there are no guarantees as anything can be going on here but as the hardware can not have been changed the problem should be limited to the HDD partition being different to what was originally set up new. So if you can attack a blank HDD with the Recovery Disc it should work.
Yes I know [b]Famous Last Words[/b] there. But that is what should happen anyway.
If you have any problems when it comes time to reinstall you can use the New copy of XP though you will need to use the Product Kay that comes with it and you will need to manually install the extra drivers though you should be able to do this with the Recovery Media and select to Auto Find the correct Drivers on the CD/DVD Drive after the Recovery Disc has been inserted.
If you need any help just post back here or Peer Mail me for a faster response.
Col