.. is bootable, whether there are partitions on the hard drive or not, PLUS, during the installation process, it allows you to create new partitions on the computer after the hard drive has been wiped.. Therefore, with a good and usable XP operating system disk, the concerns you mentioned are nil.
Please confirm the XP disk you have is the one that came with this computer and you've actually got the XP install disk... The older Dells came with two or three different recovery discs.. One is the "Resource/Driver CD" which contains ONLY the drivers.. It's NOT bootable.. One is the bootable XP installation CD which contains ONLY the operating system but sometimes extra programs that were installed at the factory ... and occasionally, there is a third which contains the extra programs that were installed at the factory because they weren't contained on the XP installation CD.
If you're sure you've got the original XP installation disc, you might try it on another computer to see if it will actually boot the computer.. If it does work on another computer, then you'll need to replace your CD/DVD drive.. (Yes, I know that DBAN works on it but some drives start failing a little at a time.. This may be the time.) Of course, if it doesn't work on another computer, then you'll need to contact Dell for a new installation disk.
Hope this helps.