Leave the battery alone. If you can't reset the BIOS and have the computer boot from the CD, then you've got other problems that need to be fixed.. Have you replaced the battery recently? If not, please do.
It could be lots of things.. Some of which you didn't answer from my first suggestions above.. Is the hard drive a SATA drive? Whether or not you have a floppy drive, you'll need to install the SATA drivers somehow.. I use a USB floppy drive on laptops..
Another question...Are you using a brand new, legal, Windows XP SERVICE PACK 2 disc to install from?? You'll need SP2 to install to the large drive.. If not, your success will be doubtful.
If you can get into the BIOS the first time, but restarting causes a lockup, then your motherboard is probably bad.. Shorts and such can cause such issues and only a new motherboard will fix it..
If the DVD/CD drive won't boot, the problem could be with a bad drive connection or a short in the drive itself.. It could be causing the entire problem.. Try disconnecting the DVD/CD drive and see if you can then adjust the BIOS settings, turn off the computer, restart the computer, and still see the correct BIOS again.. If so, you need a new drive.
(And YES, I read your post titled "Odd" below.)
Hope this helps.
Grif