When you boot to Windows XP CD-ROM to install Windows, it gives you the option during the installation to format the drive.

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Assuming your system is set to boot from the CD-ROM drive, boot with the XP
CD in the drive.  If it isn't or you are not sure, you need to enter the
system's BIOS.  When you boot the system, the first screen usually has
instructions that if you wish to enter setup press a specific key, when you
see that, do so.  Then you will have to navigate to the boot sequence, if
the CD-ROM drive is not first line, set it first in the boot sequence.  Save
your settings and exit with the XP CD in the drive.  The system will reboot.

A few screens into the boot process, if you see the message on the boot
screen to "Press any key in order to boot from the CD," do so.

After loading drivers and files, you should be taken to a screen with
the following:

To Setup Windows XP now, press ENTER.
To Repair a Windows XP Installation using Recovery Console press R.
To Quit setup without installing Windows XP, press F3.

In your case, press ENTER.

Agree to the License agreement by pressing F8.

You will then be taken to a screen with two options.

To repair the selected Windows XP installation press R.
To continue installing a fresh copy of Windows XP without repairing,
press ESC.

This will bring you to a partition map where you
can delete, create and format partitions.
Select the drive you wish to format, delete the partition, then create a new
partition, format as desired and continue with XP installation.