In order to get rid of Win 7 and install XP I ran "Boot & Nuke". When I installed XP all the files installed and then when it SAID it was starting Windows it stopped and I got the BSOD saying there was a problem.

What did I miss here? Should I have run some sort of software to FDISK the drive and then some sort of software to format?

Actually no ...the Win XP CD should have handled that...
Did you get a Win setup screen ? ?
How far into the install was the error ?
What was the BSOD message ?
Where is this XP CD from ?

PS. Is this still the Compaq laptop ?It is still the Compaq laptop.
There was no Windows setup screen.
It just began installing "files".
It stopped after all the files were finished and it said it was starting windows.
Then the BSOD appeared and said something to the effect that it couldn't continue because of a problem and to check for virus's etc.
My XP CD was purchased at a LOCAL PC store a COUPLE of years ago and is an OEM COPY and I have the legal activation info.
Could my copy be corrupted?If your copy was corrupt then it would say something that it couldn't find files. You did do the regular format right? No quick format? You made a new partition too right?