The message 206 memory failed configuration, indicates that the hardware test (run at startup) found a problem with the installed RAM. You can try to remove one of the memory-modules, to see of the problem persists. If all works fine, it means that the removed module has a problem. This tutorial
explains all about RAM.
As for the format problem, make sure what type of harddisk the computer has. If it is a SATA-disk, you need to load drivers for that, since the XP-CD does not contain them. Here
you can find information about harddrives and how to figure out if it is a SATA-disk or not. However the problem may or may not be caused by bad memory.
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Malware analyst @ Emsisoft