I believe that you need SP2 in order to make SATA disks operational under XP...

If the XP install disk that you're using doesn't have SP2 pre-installed, you might have to slipstream SP2 into the setup and make a new setup CD:

http://www.winsupersite.com/showcase/windowsxp_sp2_slipstream.asp

I had to do this to get my new Quad Core box to install XP onto its 320G SATA drive...