Microsoft have made it hard to upgrade to Windows 8.1 from Windows XP. It seems in many cases the upgrade doesn't run properly within Windows XP. In general I would suggest installing via BIOS opposed to within Windows, however it seems you had issues both ways. As Microsoft done away with the Upgrade license for Windows 8.1 I assume you are trying to install Windows 8.0 (and then go through all the hassle of updating to Windows 8.1) and not installing Windows 8.1 directly.

Microsoft have unfortunately awful deployment of Windows 8.0 and 8.1 and do not provide a direct download link to a .iso and the downloader will not work correctly on Windows XP. They have failed to listen to Windows installation experts which have highlighted all the issues end users have with such awful deployment of installation media.

Long story short, forget the media you have and throw it in the bin. First install Windows 8.1 using the 90 day Enterprise evaluation:

http://dellwindowsreinstallationguide.com/download-microsoft-windows-and-office/download-microsoft-windows/download-windows-8-1-enterprize-iso-90-day-trial/

Install via BIOS as instructed here:

http://dellwindowsreinstallationguide.com/a-clean-install-of-windows/

Next Microsoft made no means to activate the trial with a retail product key so once you have the Windows 8.1 Enterprize trial installed follow the following workarounds to download a Windows 8.1 .iso and make a bootable USB:

http://dellwindowsreinstallationguide.com/download-microsoft-windows-and-office/download-microsoft-windows/download-windows-8-1-iso/

Again install via BIOS as instructed here:

http://dellwindowsreinstallationguide.com/a-clean-install-of-windows/

You will likely need to install Windows 8.1 using a generic Windows 8.1 key and then activate using your Windows 8.0 product key:

http://dellwindowsreinstallationguide.com/a-clean-install-of-windows/microsoft-product-activation/installation-of-windows-8-1-with-a-windows-8-0-retail-product-key-notes/

http://dellwindowsreinstallationguide.com/a-clean-install-of-windows/microsoft-product-activation/product-activation-using-a-windows-8-1-product-key/

Let me know how you fare. Its a convoluted workaround but its the only way short of buying Windows again or looking for an unofficial download link.

For drivers most things will be inbuilt but you may take a few of the Windows 7 drivers such as the card reader and Dell Quickset also see the notes here:

http://dellwindowsreinstallationguide.com/driver-sets/

Thanks so much for your reply and help, but  this is  way too complicated for me since I  am not a techhie.  I have decided to buy a new laptop and junk the old one.  Just sorry Microsoft didn't warn me in the Upgrade Assistant Report that this wasn't going to work.  Thanks again.