Is this a SATA drive?
And, does your motherboard have both an IDE and SATA controller?
If so, and you are connecting to the on-board SATA controller, you may need to set up the drive as a single disk RAID array.
A number of motherboards with on-board SATA interfaces have the SATA connected to a RAID controller. In order to get XP to install to, and boot from the drive, you need to first set up the drive as a single drive RAID array in BIOS setup.
Also:
You need to be installing XP SP1.
If you have the original version of XP, you will need to "slip-stream" SP1 onto a custom installation CD.
(I believe Microsoft has instructions posted on how to do this.)
At one point when the XP installer is loading, there is a prompt at the bottom of the screen to press a key to load an alternate mass storage driver.
You need to press the key, and load the driver for the SATA controller you are using.
Chas