The Windows installation CD does not have a SATA driver. You need a SATA driver of a floppy disk or turn off SATA native driver in the BIOS.
Please click on this link and follow my instructions on how to Install Windows on a SATA hard drive :-
http://www.fixya.com/support/r4335035-installing_windows_xp_sata_hard_drive
I suggest you install SP3 (service pack 3) rather than SP2, it contains the latest bug fixes. The SP3 cannot be installed from a floppy, it can be downloaded from Microsoft, it is a large file approx 300Mb, I suggest you install it from a CD if you can borrow one.
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