is the setup cd a copy or the real deal?
if its a copy (burned) older cdroms cant read them. trust me I've been down that road.
after you start your computer up with the setup disk in the cdrom you should see a message asking you to press any key to boot from cd.(of course this is assuming your cd rom is newer and supports bootable disk). Look for it. its very brief. it only shows up for 2-3 seconds and then windows will start to load if you dont press a key on the keyboard.
If you cant even get the foppies to work (I cant belive they dont) then I definatly am stumped.