1) what could be wrong that i was not able to setup XP when there were 2 partitions. I still have two partitions and would like to re-install xp on C: drive
There is nothing wrong with having two partitions and trying to install XP. Perhaps the optical drive was having problems reading the XP disc. Try it again. It it works this time then use the utility on the XP install procedure to remove the one large partition, create 2 partitions again and format each of those partitions in NTFS.
2) whats the best way to install a OS if i have a "Diamond Stealth Radeon 9250 / 256MB DDR / PCI / DVI / TV-Out" video card installed in my pc
There is no special procedure to take when installing XP. The install program uses a very generic 640 X 480 VGA driver that will work with any video card. Once XP is installed you should install the proper driver for that board. If XP does not already have that driver in its driver database you will have to install the proper one from the manufacturer of that video card. The board should have come with a driver disc when it was purchased but it can be downloaded from the card manufacturer or from ATI.
3) just for kicks what do you think of my harddrive and video card specs ?
They are both solid components from good companies. The 9250 video card is not intended for gaming, though.
You should consider partitioning your hard drive in up to 4 partitions to help organize your music, documents, installation programs, video, photos, etc. Even with a maximum of 4, not necessarily equal sized partitions, you wont be filling up a partitition soon.
A bit of advice: don't store any valuable files in the My Documents folder or anywhere else on the boot drive. If (when) you decide to reinstall XP all the files on the other partitions can be left alone and will be waiting there for you after the next install is done.