|Does that mean you have only 8Gig of hard drive space? The following link shows available space requirements for XP:|
As far as your attempted install, I believe that you tried to install with a windows install CD without setting your BIOS boot order with the CD drive first. This allowed you to start the install, but when windows was ready to 'fix' the registry during a restart, it did not go back to the install CD, but it tried to start from a partially installed windows XP on the hard drive. The BIOS MUST boot back to the CD during two or 3 restarts to install XP completely.
With new hardware (Atom processor,motherboard, etc) you will not have the drivers for these on your XP install disk. IF they are available at all, you will need to have them available during install,BUT windows XP will not read them from USB during install (only floppy disk or inserted into a customized windows install CD)
I WOULD recommend go back to LINUX, OR use a copy of Windows 7 BASIC (the smallest install of windows 7).