windows xp home edition wont install

I just built my new pc and got in running.

So i put in my OS disk.

I got to the setup menu and clicked on the cdrom option.

I get to the (un)partitioned setup which looks something like this.

476938 MB Disk 0 at Id 0 on bus 0 on atapi [MBR]

Unpartitioned space-7 MB (When i first tried to install it it said 476940 MB)
Partition3-106497 MB
Partition1-831050 MB
Partition2-265613 MB

So i originally picked the unpartitioned one and it started downloading normally.

When the download got to the end it told me that the setup couldn't be finished and the the disk could be damaged etc.

So i borrowed my friends disk and I got the same problem.

Everytime i try to create a new partition it changes to 7 MB.

Can anyone help me with this problem?

Thanks.

You try to create a new partition but there isn't any unpartitioned space left (only 7 MB). You need to delete the existing partitions first or select an existing partition on which to install windows.