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"is this because windows in on the hard drive and as a result i will not be able to format the drive? "
Yes. If you are running the operating system off from the C: drive, you cannot format the drive while the computer is booted. If you start the install process by booting off from the Windows XP CD, you should be able to format the drive.
Does this computer have a floppy disk? If so, I could send you a floppy disk image that would let you format the drive automatically.
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