First, many SATA controllers are also RAID controllers. If your is one of
those, then you probably need to create a RAID arrary before attempting to
install XP. The motherboard manual should say something about this. If you
have a single SATA hard drive, it may automatically make an array of one
disk, or you may need to use some custom setup option ot force this to
happen.
Second, XP does not yet have native support for SATA, so it ain't plug&play.
You need to hit F6 during the installation of XP and feed the XP installer a
floppy with SATA drivers on it. It must be a floppy. If the drivers came
on a CD, you must copy them to a floppy. Be sure to copy everything in te
SATA driver directory. I found that a file called "oemsetup.txt" was
absolutely essential when loading XP. (I have an ASUS P4S8X motherboard.)
In fact, instead of copying from the CD, first check to verify that you have
the latest drivers. Also, check whether you have the latest motherboard
BIOS.
If the XP installation keeps balking, try using a disk preparation
CD/floppy, such as nearly always comes with new hard drives. Can the disk
preparation tools see the SATA drive? If it cannot, check connection and
the RAID array thing I mentioned above. If it can see the disk, then the XP
installer should also be able to see it, if you provide the latest drivers.