Before inserting the windows xp install cd, did you change your boot priority to read from cd first?
If not reboot the machine and hit f2, go to something like device priority or boot order or something to do with the above, you should find a menu that lists a hard drive, floppy drive, cd-rom, etc. look at the bottom of the screen it will tell you which keys to press to move an item up or down, put cd-rom to the top so it is first boot device, save changes, reboot the computer and it will tell you to press any key to boot from cd. locate your any key and boot to the windows cd, it'll load a bunch of drivers and stuff and you'll get to the point it'll you if you want to set up windows XP, repair an install using recovery console, or cancel, select set up windows XP. press f8 to accept agreement and it will scan for previeously installed versions of xp, when it finds it, it will ask you to press R to repair the selected installation, Press R and follow the onscreen instructions, this SHOULD repair the blue screen error, if/when you can get back on, i'd suggest running any anti-virus/spyware and if you happen to have any maintenance programs or cleaners run them as well.
A repair install using the windows xp cd will not result in data loss of personal files, just do NOT install windows again on your harddrive unless you don't mind losing all your files and performed a format on your harddrive.