C0000221 Unknown Hard Error Unable to re-install XP

You say that Ghost did not make a "working" image.  Did you attempt to use Ghost to restore an image to your hard drive?  If you did there may very well be some corrupt files on your hard drive (including the ntdll.dll file).  If so, XP will not install (see either http://support.microsoft.com/default.aspx?scid=http://support.microsoft.com:80/support/kb/articles/q101/0/96.asp&NoWebContent=1 or http://support.microsoft.com/?kbid=314474).  The only solution which I would see (if some files are on the hard drive) is to wipe the drive clean via a format, or via the deletion of a partition (Ghost would set up a partition when it restores your files).  When are you receiving the error message?  If after being offered to opportunity to format the installation drive, then go back through the procedure and do that.  If before that the following KB file MAY be of help: http://support.microsoft.com/default.aspx?scid=kb;en-us;313348&Product=winxp

First I used  Ghost to make a image of my old drive and then restore it on the new HD. When I try to start the computer with the new HD (jumpers are set correctly and the "old HD removed" the start up freezes on the XP blue welcome screen.

Thereafter I formatted the new drive and tryed a clean XP install (I even tryed it at a couple of other new HD)  During this the  everytime XP comes with this error ( C0000221) message before there are any selection possibilities. What you see that its loading the initial data from the XP cd, followed by the screen becomming black and shortly thereafter the error message appears.

I think it boils down to a potential problem not with the HD but "something else". 

GJ

You might try the resolution to recover that file from this link:

http://support.microsoft.com/?kbid=315241

One possibility is that the XP CD is dirty or damaged so that that file cannot be loaded.  Try cleaning it very gently; you can use (very sparingly) a cleaning solvent which is intended for electronics and a very soft cloth lightly applied.  That solved a similar problem for we with a two year old XP CD.  I do not know whether Dell will replace a defective CD; Microsoft will but only on retail purchases (for about $30 and a two week wait).  But before you asume defectiveness, try cleaning it.