A Clean Install will format itself. You just follow the prompts. A good, although perhaps overly confusing, guide here:
http://www.michaelstevenstech.com/cl...all.html#steps
The main point is you need a unique XP license.
You cannot use any existing license on another computer without relinquishing the old computer.
The key is tied to the motherboard.
You basically need the key to the original computer which may be on a label on the case or else you need a new version of XP simply for a new key.
You could also use
ubuntu which is a free Linux OS:
http://www.ubuntu.com/