|Since your previous hard drive was 250gb manufacturer's size, the computer's bios should have no problem recognizing a 500gb manufacturer's size drive.|
A new hard drive has no data on it, and is not bootable because it has no data on and and it has no operating system installed on it.
If you want to install XP on it, you must set your Boot Order or similar settings in the bios Setup to boot from a CD drive or similar before any hard drive, Save bios settings.
With the bios Boot Order or similar set that way, then when you already have a bootable CD or DVD inserted in a drive while booting, you will see a line while booting "Press any key to boot from CD" or similar - press the stated key while that line is on the screen.
NOTE that an operating system CD or DVD will often automatically boot without you seeing "Press any key to boot from CD" or similar on the screen when the bios Boot Order or similar is set that way when there is no data on the drive or when there is data on it but no operating system has been detected by the bios on it .
(DO NOT press that key again once XP's Setup has started - Setup will auto boot the computer twice - pressing that key again while booting after Setup has started will start the Setup process over again from the beginning.)
Your hard drive is probably SATA.
If the bios Setup has the SATA drive controller(s) in SATA or AHCI mode, the files initially loaded from the XP CD cannot recognize SATA drives because there are no SATA drive controller drivers built into the contents of the CD.
That results in Setup not being able to detect any SATA drives.
The easiest way to get around that is to go into your bios Setup and find the setting for the SATA controller mode, and change it to an IDE compatible mode of some sort, Save bios settings, then the files intitially loaded from the XP CD WILL detect SATA drives, as IDE compatible drives.
We probably can't find the info about and tell you where and what that setting is because usually we cannot find that specfic info for a brand name system bios version, but whatever it is, it's presently set to SATA or AHCI, it's changable, and at least one other choice is an IDE compatible mode of some sort- e.g. IDE, EIDE, ATA, PATA, Compatible, etc. .
After Setup has finished and you have loaded the drivers you need for your system including the SATA drive controller drivers for the mboard, you can then go into the bios Setup and change the SATA controller mode to SATA or AHCI.
When you have only one hard drive...
Windows Setup defaults to making only one partition on a hard drive (or, a brand name software installation usually has only one visible - in Windows itself - partition on the single hard drive) .
The problem with that is if you ever need to re-load Windows (or the original brand name software installation) from scratch, you lose everything on the partition Windows was installed on, and when you have only one (visible) partition on the hard drive, that's everything on the drive - unless you copy the data you don't want to lose to elsewhere BEFORE you install Windows from scratch (most people don't bother, and lose all their data) .
If you're installing XP from a regular CD, it's recommended you make at least TWO partitions on the drive.
How to make more than one partition on a hard drive, when you're installing Windows on a blank hard drive, or when you are deleting the existing partition(s) on a hard drive before you run Setup .....
See Response 3:
XP doesn't have the drivers built in for most things that first came out after XP was first released, circa 2001, and it doesn't have some of the drivers built in for things made before that.
Whenever you load Windows from a regular Windows CD (or DVD) from scratch, after Setup is finished you must load the drivers for the mboard, particularly the main chipset drivers, in order for Windows to have the proper drivers for and information about your mboard hardware, including it's AGP or PCI-E, ACPI, USB 2.0 if it has it, and hard drive controller support. If you have a generic system and have the CD that came with the mboard, all the necessary drivers are on it. If you load drivers from the web, brand name system builders and mboard makers often DO NOT have the main chipset drivers listed in the downloads for your model - in that case you must go to the maker of the main chipset's web site, get the drivers, and load them.
If your XP CD does not have SP3 updates included.....
See Response 6
"If your XP CD does not have SP3 updates included, the best time to load them is right after you have installed Windows from scratch...."