If you only have a 4Gb drive, I suggest you get a new harddrive before you go about doin' ANYTHING to that computer.
Format the drive, with something like MaxBlast or such, or if you really it like a new drive, write it is "0's" took me a day or so to write a whole 120Gb harddrive though. And for putting Windows XP onto a 4Gb drive, and that's all the space you have, you shouldn't do that.
Get a new drive. I had a 10Gb drive with Windows XP Pro on it, and it took me only week or so to fill that drive up.