|1st of all, are these the correct specs? --> windows xp sp2, 192 mb ram|
If they are, you have way too little RAM & I've got to ask why you haven't updated to SP3 after all these years?
If your hard drive has failed, you won't be able to format it. And formating isn't something you should even be considering at this stage anyway. Have you checked the BIOS? Is the HDD being properly recognized?