Windows always require a repair or better yet a reinstall when moving a hard drive with the OS to another machine with different hardware spec. That reboot is probably normal.
The problem with not being able to reinstall Windows is not normal.
So you are installing Windows XP? How far did you get with 250Gb Sata Hard Drive? Did you need to supply the SATA driver?
You just burn it to a CD and boot to the CD. Making sure your boot order has the CD first before the hard drive on the other machine if Windows is installed.
*EDIT* You just need this file http://www.memtest86.com/memtest86-3.3.iso.zip
Unzip it, you'll get the ISO. Burn it as an image with your favorite CD burning software or if you don't have one here's a free one that will do. The Official ImgBurn Website