Not sure (all my computers use IDE), but if I'm not mistaken, you usually need specific drivers for SATA cards, drivers that may or may not be on your XP install CD. However, I did notice last time I installed XP that it asked "If you have an SATA driver disk, insert it now" or something along those lines. If you have the drivers on say, a floppy, USB drive, or CD, you may be able to get Windows to detect the card and run with it.
So you say you tried installing Windows on a USB device? Does the laptop have a working CD/DVD-ROM drive (for a Windows XP CD-ROM)? What parts of the computer aren't smashed? If the motherboard's HDD connector is broken, it is possible that the IDE/SATA internal controller may be smashed and malfunctioning as well. I'd try using a USB or CD booting Live OS like Ubuntu or DSL Linux (Damn Small Linux - DSL information
) which can boot from a CD or USB drive and run without needing to be installed on a hard drive. Use these live OS'es to test out the system to make sure it's all good and functional before you spend money on a possibly junked computer. I know my friend found a Dell Inspiron laptop that got smashed (screen was obliterated, drives rusted shut, no power supply or anything) and the only thing out of it that still worked was the hard drive, which eventually died after a year of FTP server use.