See this answer
Reboot your system and hit F2 as soon as you see the Dell startup screen (the options are F2 for setup, F12 for boot sequence).
In the System Setup screen, do these steps.
Make sure your Diskette Drive (3.5 floppy) is set properly (Usually set to Internal)
Make sure that "Drive 0: SATA-0" drive is set to "ON"
Go to "SATA Operation":
Your system proabaly came set to "RAID Autodetect / AHCI" - THIS SETTING CAUSES YOUR SYSTEM TO GO INTO AN IDE LOOP AND DOESN'T ALLOW IT TO FIND YOUR FACTORY INSTALLED SATA DRIVE.
CHANGE THE SATA OPERATION SETTING TO "COMBINATION"
Reboot - make sure that the boot sequence is set to CD rom before HD and make sure that the reinstall CD is in the drive. Setup will load, hit enter to reinstall XP. Your HD should now be detected and you should see the licensing agreement.
If you have your files backed up I reccommend deleting the partition and reformatting prior to installing XP, it will give you that option after the license agreement.
Once you have successfully reinstalled the OS, Dell reccommends that you change the SATA Operation setting back to RAID AUTODETECT / AHCI (or back to whatever your factory setting was) to avoid any problems with other IDE devices installed on your system.
Restore Complete but Stuck on DRMK