That system is a media center PC, came with a SATA drive...so the fact that the drive is SATA should be a non-factor.User Manual
Page 48 indicates that you have restore/recovery CDs and not MS Genuine XP install CDs. Same page also indicates that instructions for using said CDs is in hands of owner.
Restore CDs are often dependent upon files which are stored on the hard drive...in order to work as planned. These files probably exist in a separate, possibly hidden partition which was created by your system manufacturer...to enable restore operations successfully.
Since a new hard drive would not contain such files, attempting to restore the system...logically should fail (IMO).
A search of the Gateway site...reveals little to me. Any of the links that appear to contain info re reinstalling XP...don't seem to work for me.
If I had a system like this...I would just
a. Install disk cloning software on old drive.
b. Clone old drive to new. New drive would be exact copy of old.
c. Remove old drive, replace with new.