Solution
1) Do not go into consule rec. mode, there is nothing you can do there for now. But just an FYI if you are using XP home the Admin password is global and UNCHANGABLE it is simply Enter. Or Spacebar Enter.
For XP Pro it is whatever you set up durring install, if you have no yet installed XP Pro there is really no reason to go into consule mode.
2) To format your drive put the CD in, reboot, Select install, keep following the prompts to install you will even. get to a box that lists your current partitions (similar to what you would see in linux but not exactly) anyway delete all the partitions that are shown, then select the option to install the operating system in the unpartitioned space, it will ask you for the size on the next screen just make it for the hole drive.
If you need more spec. instructions..... just let me know.