A couple things you can try. You'll need your Windows XP CD-ROM.
1. Boot off of the Windows XP CD-ROM. When it gives you some options, press Enter (to install Windows) and F8 (to accept the licence agreement). It should search for previous Windows installations, and give you the option to attempt a recovery install on one of them. Try this.
2. If the recovery install doesn't work, or if Windows setup doesn't detect your previous installation, then proceed with the setup (do NOT format your hard drive) and install Windows into a different folder if you can. Then, when the setup is complete, you should be able to see your files still on the drive and maybe even attempt to repair your previous installation.
If you can see the files from an MS-DOS disk, you must be using FAT32. I can't really think of very many good reasons to use FAT32 with Windows XP, but some computers still come with that file system. Maybe you should consider upgrading to NTFS...