Teelo, first make sure the BIOS is recognizing the hard drive. If components are not recognized here you can be dang sure the XP install won't recognize them
It seems like a jumper issue on your hard drive. Some reccomendations I can make are:
1) Ensure your BIOS is seto to AUTO for all your IDE devices. You should never have to touch that option unless the PC is REALLY OLD.
2) Try each jumper setting on the back of the drive untill it is recognized in the BIOS. Start with the left the work all the way down to the right. You want this to be the Master and on the Primary IDE channel since it has your OS.
3) Ensure your cables are plugged in correctly. The red part of the IDE cable should always face Pin1 or what I reccomend is it should always face the power plug.
4) Ensure the cable and power source are good. You know that the CD-ROM drive is being detected since it is trying to boot from it so try that IDE cable and power source.
5) I would reccomend setting the boot order to 1st-CD-ROM, 2nd-Floppy, 3rd-Hard Drive.
6) If none of that works try the hard drive in a differnt computer or try another hard drive in your current computer.