Try using a 3rd party app to reformat or delete the drive. Format to FAT32. XP will reformat again to NTFS.
If that doesn't work, install Linux to it and then overwrite Linux by installing XP over that.
If this is your only PC, get a LiveCD version of Linux and ensure it works first. Then you will still have access to net and help.
Gnome Partition Editor
http://gparted.sourceforge.net/index.php
MEPIS 8, a Linux distro, works pretty good on my PC that came pre-installed with XPSP2.
http://www.mepis.org/
Download
http://www.mepis.org/mirrors