I used f8 and got list options. Chose "Last Known etc - but it just takes me the screen I normally get - giving an option to start in Windows XP Media Centre Edition or in Safe Mode. But if I choose the Windows XP it just freezes in black screen like before.
It does let me choose f8 again, but then I just go around in circles.
(Can't find the CD you mention - not sure I've got it though - PC came with it installed. I might have a Windows 98 CD, plus an "upgrade" to XP CD)