Can you recall the steps you took to reinstall? After you hit F8 to accept the licence agreement, you have two choices:
- Run a Repair installation by hitting 'R'
- Install a fresh copy by hitting ESC
If you press 'R', the operating system starts deleting system files, but only those which it can restore. It then copies the installation files from the CD to the hard drive. You'd see a yellow bar on a blue background moving from left to right during this process. After that, you'd see the regular Windows Installation splash screen. A 'Repair' installation performed in this way leaves your files and data intact. Neither do you need to activate Windows again.
However, if you're seeing the message that you do need to activate Windows, then I guess you used the second option, but didn't delete the partition first. This is likely to result in all sorts of problems because many system files will have been updated during the regular 'Patch Tuesday' updates. Trying to overwrite them with older versions from the installation CD is not something XP likes doing.
In your current situation, I would advise you to try and run a Repair installation. There are screenshots of the Repair process installation on this site: How To Do A Repair Install Of Windows XP
If that fails, then you're you'll need to do a clean install. That means deleting the partition which also deletes all your personal data and files if they're located on the root (C:\), recreating it and then reformatting and reinstalling the operating system. You'll also have to install DirecX which should be the first installation followed by the chipset drivers for the motherboard and then drivers for your video card, sound card etc.
An option which you might want to consider is to buy a new hard drive and then install Windows XP on that. Windows will automatically re-assign a drive letter to the drive which you have already and after the installation completes, you'll be able to access your own data on that drive. Hard drives are quite cheap these days and you don't need a large capacity drive. 100GB should be enough although the difference between a 100GB drive and a 250GB dive is minimal and you might want to go for the larger one because of that. You can partition it so that you have say 60GB for the operating system and programs and then the other 190GB can be used for storage.