<<...so I don't understand why the 1st boot sequence is CD/DVD. Shouldnt it be HDD?>>
Depends on what the user wants.
If the user is experiencing problems...he/she often sets the CD/DVD as the first boot device...in order to troubleshoot or reinstall XP via CD easily.If the BIOS is working properly
, it checks the boot order listed...sees that there is no bootable device in a selection...and moves down the list until it finds a bootable device.
FWIW: The floppy should be moved from the first two options in the boot order, since these days a system will boot either from hard drive or optical drive.
But...it appears that your BIOS is not working properly...since you get the PXE message. Any reference to PXE during boot...normally indicates that the system is trying a network boot. When this is not the intent, it's usually an indication that the CMOS battery is failing and needs to be replaced.
CMOS Battery Replacement - http://www.liverepair.com/encyclopedia/art...cmosreplace.asp
After replacing it, you will have to set the correct date/time in the BIOS...an important, easy step. Your BIOS will contain instructions on how to modify the date/time. When done, hit F10, answer Yes, and the system will automatically boot into XP.