I bought a new CD-ROM drive.  I am performing a clean install. I am starting with a freshly formatted hard drive as well. The only cards on the motherboard are the graphics card and the ethernet card. Have PS2 Keyboard and mouse.  I am wondering whether reducing the transfer rate for the CD-ROM drive in the System BIOS may fix this.

 

Are you trying to perform a clean installation, or an upgrade installation?  If the latter, the former is much more reliable.  XP Pro has gone on every XPST I've tried it with, with no problems of this sort.  Are you certain your CD is in good shape?  You'll also want to make sure you have all peripherals except the keyboard, mouse and monitor detached, and you'll probably want to use a PS2 mouse and keyboard.

That's odd.  Did you try clearing NVRAM after you installed the new drive?  I've never had a problem with new drives (assuming they're configured properly), and I've made some fairly serious upgrades to the speed/type that originally accompanied some of the subject systems.

Courtesy of the XPST Reference and Troubleshooting Guide that accompanied XPST systems (always a good place to look for help), click this.

I experienced the same problems on another XPS T500 as well as on an XPS T400 or 450 (not sure).  I have two different install cds. Had the problem with both cds.  All of those PCs had different CD ROM drives. 

By the way, how do you clear the NVRAM as mentioned above?