I personally use Good old dos but winxp has the format ability built into setup.
to use xpcd to format:-
set your computer bios to boot from cdrom first, insert the XP cd and reboot
when your computer starts, setup will autorun and it will ask if you want to upgrade or full install, choose full and it will ask if you want to format. Let it format (i still use fat32, but others use NTFS....your choice)
it will format the drive for you and then continue with setup (may restart again) it really is that simple.
NOTE:- ALL YOUR DATA WILL BE LOST FROM DRIVE C:, so if you have important stuff....back it up first.