::make sure in your confusing f12 screen under the boot option it says DVD\CD\ROM whatever inspiron has is 1st to boot then restart::
If your CD is an actual copy of Microsoft Windows XP and not a recovery CD you will have to delete your original ruined partition.
Press any key to boot from cd... [press a key]
A blue screen should appear, this is the windows installer. It should take some time before the next screen appears. If it still recognizes your last installation it may take you to a screen that says:
'If one of the following Windows XP installations is damaged, setup can try and repair it.' Since what you want to do is reinstall completely hit escape.
Even if that screen doesn't appear you will eventually get to a screen saying "[PARTITION] BLAH BLAH FAT32" just select the partition that is largest...and hit the D key. During the next screen hit the L key. You want to get it to say 'Unpartitioned Space' and show the entire amount of your hard drive. Like this http://technet.microsoft.com/en-us/library/Bb457130.hb-02.4_big(en-us,TechNet.10).gif
When you get there, press enter. Then select the first option quick format. Then stick around the computer it will later prompt you for other options.
ALSO... If you happen to get through the setup is copying files and it restarts your computer, prompting you to press any key to boot from cd AGAIN do not press a key or you will just put yourself in a setup loop.
PS If it still starts the blue setup screen even without pressing a key, start the whole process again, and wait for it to finish copying setup files...then take the cd out and shutdown(or you may be doing this while you shut down) then it will load the rest of setup and prompt you to insert the cd again. another way of doing this is going into your bios the weird confusing F12 screen you mentioned again and under BOOT menu setting the first thing to boot as your IDE hard drive....After you got through the first part of setup...