Providing you can boot/install W2K via the CD (as suggested by 'robmlc'), no need of removing (all) partitions; just install W2K alongside current XP. Also install all required apps/utils afresh for W2K.
W2K will (probably) go in as windows - as winnt is already in use by XP. W2K will overwrite the XP mbr etc; will disable access to XP; and there will (should) be no evidence of XP in the boot-menu etc.
Once W2K installed OK, just locate/delete the XP folder etc.; also make the ERD for W2K. Once XP has been deleted, defrag drive to tidy up the scene...
Removing all partitions etc. is a viable route, but it should not be necessary here? As long as you defrag drive afterwards to clean up, the end result will be much the same; and your data will also still be secure on the drive? But it would be wise to back-up/save data alsewhere first - just to be on safe side?
Before you start out with W2K, advisable to run the chkupgrd.exe util (on the CD - usually). It will generate a report on what is/isn't OK for W2K; after-which obtain all required drivers etc... The util can be run from the CD (usually via any installed OS), and also via a suitable boot-disk (with CDROM support).
Doubt you will be able to extract/use apps. from the recovery CD...