Reformatting does mean you'll lose everything. Understanding that, here's the idea.
If you start up your computer using the new Windows XP CD, you should be able to from there tell it to do a clean install, and to erase everything existing on your hard drive. This will give you a clean slate so you can start over....
Things to be aware of though.. If you want to load from the CD, usually as the computer is starting, before you see the Windows screen, a message will appear saying "Press any key to boot from CD..." You want to press any key there. If that does not appear, then chances are, your computer is not configured to load from the CD.. And that's a slightly more complicated process to explain.
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