A different disk might help... the particular disk might be faulty. However, have you already (sucessfuly) used the XP disk?
If so, then try to do a clean install (i.e. delete all the partitions and start afresh).
If this doesn't work, then I recomend a different OS (Linux
Can be downloaded for free as well, and is soooo much betr.
In the case of the drives... have you checked that they are in the correct mode (jumpers on the back of the drive). Make sure one of them is set to master, and the other, slave.
Also, make sure that your BIOS is able to detect the drives (or else your OS won't stand a chance).
Once this is checked, then the drives should appear automatically in My Computer.